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The Internal Revenue Service announced that the amount individuals can contribute to their 401(k), 403(b), and most 457 plans in 2024 has increased to $23,000, up from $22,500 for 2023. The limit on annual contributions to an IRA increased to $7,000, up from $6,500.


The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan remains $7,500 for 2024. Therefore, participants in 401(k), 403(b), and most 457 plans, as well as the federal government's Thrift Savings Plan who are 50 and older can contribute up to $30,500, starting in 2024. The IRA catch-up contribution limit for individuals aged 50 and over remains $1,000 for 2024.




A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit.


Many people engage in hobby activities that turn into a source of income. However, determining if that hobby has grown into a business can be confusing.


To help simplify things, the IRS has established factors taxpayers must consider when determining whether their activity is a business or hobby.


These factors are whether:


● The taxpayer carries out activity in a businesslike manner and maintains complete and accurate books and records.

● The taxpayer puts time and effort into the activity to show they intend to make it profitable.

● The taxpayer depends on income from the activity for their livelihood.

● The taxpayer has personal motives for carrying out the activity such as general enjoyment or relaxation.

● The taxpayer has enough income from other sources to fund the activity

● Losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.

● There is a change to methods of operation to improve profitability.

● The taxpayer and their advisor have the knowledge needed to carry out the activity as a successful business.

● The taxpayer was successful in making a profit in similar activities in the past.

● The activity makes a profit in some years and how much profit it makes.

● The taxpayer can expect to make a future profit from the appreciation of the assets used in the activity.


All factors, facts, and circumstances with respect to the activity must be considered. No one factor is more important than another.


If a taxpayer receives income from an activity that is carried on with no intention of making a profit, they must report the income they receive on Schedule 1, Form 1040, line 8.



Filing an Extension to Get an Automatic Six More Months to File


For most individual taxpayers, the tax filing and payment deadline is Monday, April 18, 2022. Those who need more time to complete their return can request an automatic six-month extension to file. The extension allows for extra time to gather, prepare and file paperwork with the IRS.


This extension gives taxpayers until October 17 to file their tax return. Taxpayers must request an extension to file by the regular April 18th due date of their return, or they may face a failure to file penalty.


However, taxpayers should be aware that an extension to file their return doesn’t grant them an extension to pay their taxes. They should estimate and pay any owed taxes by their regular deadline to help avoid possible penalties.



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©2024 by Law Office of James D. Lynch, PLLC. The information contained in this website is for informational purposes and is not to be considered legal advice.  Any correspondence between you and the Law Office of James D. Lynch is not intended to create an attorney-client relationship.  Please do not send confidential information to us until after an attorney-client relationship has been established by an engagement letter signed by the proposed client and our attorney.

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