As tax year 2012 draws to a close, it's time for US taxpayers to make the most of current provisions and also prepare for the tax filing season ahead. We tell you the top 3 things that Indian Americans should keep in mind now.

Be prepared for expiry of Bush Tax Cuts

The Bush Era tax cuts that were introduced after the financial crisis are set to expire in 2012. Some of these include:

> The standard deduction for married couples will fall and the ceiling of the 15% bracket for married couples will fall

> The 10% tax bracket will expire, reverting to 15%

> The child tax credit will fall from $1,000 to $500

> The tax rate on long-term capital gains earned by middle- and upper-income people would rise from 15% to 20%

> The tax rate on qualified dividends earned by middle- and upper-income people would rise from 15% to ordinary wage tax rates

> Tax brackets would change: the 25% tax rate would rise to 28%; 28% to 31%; 33% to 36% and 35% to 39.6%

These are some of the major cuts in the offing. You can get more details here.

Unless the Congress votes for extension, the low tax regime will be replaced by higher rates. If the stakes are high, you may want to consult a tax planner to review your position and find ways to minimize taxes.

For instance, most experts agree that the current rate of 15% for capital gains is as good as it can get. "If someone has shares which could be disposed off before the end of the year for a gain and buy them again early next year, that would allow the gains to be taxed at the 2012 tax rate. The wash rule is applicable only for capital losses and not gains," explains Roy Vargis, an Illinois based CPA and promoter of This might be a good time to review your Indian portfolio. Long term capital gains are tax free in India but taxed in the US for US residents, green card holders and citizens. If you have a large portfolio of Indian securities, you may want to employ this strategy to minimize your tax bill.

For those placed in the IT consulting space, Vargis says that it may be ideal to receive incentives and bonuses before the year ends. "In several IT consulting companies, employees are given control over when they can receive their bonuses," he adds.

Of the few other things to do, conversion to the Roth IRA might be a good one right now. If you have been putting off conversion to the Roth IRA, now might be a good time to act. If tax rates go up, you will benefit from conversion. If rates don't change, you have nothing to lose.

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