Key dates ahead as U.S. nears edge of 'fiscal cliff'

WASHINGTON Fri Dec 28, 2012 2:44am IST

The U.S. Capitol Christmas Tree is pictured against a backdrop of the U.S. Capitol Building in Washington, December 4, 2012 during the official lighting ceremony for the tree. REUTERS/Jason Reed

The U.S. Capitol Christmas Tree is pictured against a backdrop of the U.S. Capitol Building in Washington, December 4, 2012 during the official lighting ceremony for the tree.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - Sharp U.S. tax increases and government spending cuts will take effect in January as part of the "fiscal cliff" unless Congress and President Barack Obama can agree soon on a deal to avoid it.

With few signs at the moment of such an agreement emerging, here are some key dates ahead:

* December 27. Senate reconvenes after holiday break. Spends day debating measures unrelated to the fiscal cliff.

* December 28. Senate expected to continue debating measures unrelated to the fiscal cliff.

* December 30. House of Representatives expected to reconvene.

* January 1. Expiration of low rates for individual ordinary income taxes and investment income taxes, including capital gains and dividends. The low rates were enacted under Republican President George W. Bush on a "temporary" basis and extended in 2010 under Obama.

Expiration of Obama payroll tax cut of 2011 and 2012.

Return of caps on personal exemptions and itemized deductions for upper-income taxpayers. They were ended by Bush.

Deadline for dealing with "tax extenders" such as the corporate research and development tax credit. These and other items must be extended by year-end to be claimed in 2013.

Deadline for fix to the alternative minimum tax. Without action, the AMT will begin hitting millions more Americans.

New taxes take effect under Obama's healthcare overhaul. One is a 0.9-percentage point increase in wage income tax for individuals earning more than $200,000 a year. The other is a 3.8 percent Medicare tax on investment income above the same level. These take effect regardless of the cliff outcome.

Estate tax on assets left to heirs will rise to 55 percent, after excluding the first $1 million of value, from 35 percent after an exemption level of $5 million.

* January 2. Without congressional action to waive or postpone them, spending cuts of $1.2 trillion over 10 years begin. Known as "sequestration," these were put in place in 2011 after a congressional "super committee" failed to devise a fiscal plan.

* January 3. A new Congress is scheduled to convene.

* January 7-11. Congress scheduled to be out of session.

* January 14. Congress scheduled to reconvene.

* January 20. Presidential inauguration day. A public ceremony is planned for the following day.

* February. White House releases annual proposed budget. Treasury exhausts "extraordinary measures" to postpone the arrival of the U.S. debt ceiling. Without action to raise it, the United States faces possible credit rating downgrade again.

* March. Funding of federal government expires with the expiration of a continuing resolution.

(Reporting by Kevin Drawbaugh, Richard Cowan and Kim Dixon in Washington; Editing by Mohammad Zargham)

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