IRS delays Roth catch-up requirement for two years
If you’re 50 or older, you can make an additional $7,500 in “catch-up” contributions to 401(k) and similar plans. However, under SECURE 2.0, enacted in late 2022, high-earning participants (those whose wages from the plan sponsor exceed an inflation-adjusted $145,000) can make catch-up contributions only to a Roth account starting in 2024. In other words, catch-up contributions would no longer be deductible (although qualified withdrawals would be tax-free). The IRS has delayed this requirement to 2026, allowing high-earning participants to continue making deductible catch-up contributions in 2024 and 2025.
You should still file a tax return even if you’re unable to pay the tax due
If you’re unable to pay some or all of your taxes when they’re due, you should still file a timely tax return. By doing so, you may qualify for a reduced late payment penalty. You’ll also avoid the late filing penalty, which is 5% per month of the balance you owe. Consider paying as much of the tax as you can when you file your return to minimize interest and penalty charges. It’s a good idea to file Form 9465, “Installment Agreement Request,” with your return to initiate the process of arranging a payment plan.
Can you deduct online sports gambling losses? Don’t bet on it
Online sports betting is now legal in most states. Unfortunately, many people who make online bets don’t fully understand the tax implications of their wins and losses. In fact, winnings are taxable as ordinary income, while losses are deductible in a given year up to the amount of winnings. But here’s the kicker: Gambling losses are itemized deductions. So, if you don’t itemize, your winnings remain fully taxable, but you can’t claim a deduction for your losses.