National taxes

This could be a very good year for one lucky winner of the fourth-largest jackpot in Mega Millions history.And yet, kicking off 2023 with $785 million could have a downside."The curse of the lottery losers is very real," said Andrew Stoltmann, a Chicago-based lawyer who has represented several recent lottery winners.One of the very first decisions a winner must make — whether to accept the jackpot as a lump sum or as an annuity — often ends up being their downfall, Stoltmann said.More from Personal Finance:4 key things to…

Anadolu Agency | Anadolu Agency | Getty ImagesOf course, the advertised amount is only what you'd get if you were to choose to take your winnings as an annuity spread over three decades. The lump-sum cash option — which most winners choose — for this jackpot is $403.8 million, as of mid day Tuesday.Regardless of how you'd decide to receive your windfall, taxes would take a bite out of it.$96.9 million in taxes would be shaved off cash optionAssuming you're like most winners and were to choose the cash option, a mandatory…

1. Bigger contribution limits on retirement accountsIf you're eager to boost your retirement savings, there's good news for 2023: higher contribution limits for your 401(k) and individual retirement account.In 2023, the employee deferral limit is $22,500, up from $20,500, and catch-up deposits for savers age 50 and older jump to $7,500, up from $6,500. These increases also apply to 403(b) plans, most 457 plans and Thrift Savings Plans."That's a big change for a lot of people," said certified financial planner Brandon…

Hispanolistic | E+ | Getty ImagesIf you're worried about getting a tax form from payment apps like Venmo or PayPal, you're now less likely to receive one for 2022 — thanks to a change from the IRS.The agency on Friday announced a one-year delay for a new tax reporting rule, requiring payment services to issue Form 1099-K for business transfers over $600, and many tax experts have applauded the change.Before 2022, taxpayers and the IRS received 1099-Ks when payments crossed a threshold of more than 200 transactions worth…

Sdi Productions | E+ | Getty ImagesIf you're retired and skipped your 2022 tax payments, you can still avoid late penalties with an under-the-radar year-end strategy, experts say.Since taxes are due as you receive income, you must withhold levies from earnings or pay quarterly estimated tax payments. You may owe quarterly taxes if you didn't withhold enough from Social Security, pensions or other income.But if you missed paying quarterly taxes, you can correct that mistake through your year-end required minimum…

'Take lemons and make lemonade' with tax-loss harvestingWith the S&P 500 Index down nearly 20% for 2022 as of midday Dec. 19, it may be a good time for tax-loss harvesting, which allows you to offset brokerage account profits with losses, Roberge said.After reducing your 2022 investment gains, you can use additional losses to lower regular income by $3,000 and carry the remaining losses forward to future tax years.  Karen Van Voorhis, a CFP and director of financial planning at Daniel J. Galli & Associates in…

AsiaVision | E+ | Getty ImagesAs the tax season approaches, many Americans are bracing for a new reporting change for third-party payment networks like Venmo or PayPal.  Starting in 2022, you'll receive Form 1099-K, which reports income to the IRS, for business payments over $600. But experts say it's possible you'll receive 1099-Ks for personal transfers by mistake."As tax preparers, we are more or less expecting the worst," said Albert Campo, a certified public accountant and president of AJC Accounting Services in…

If you're eager to file your 2022 tax return in January or early February, the IRS has a warning: You'll need to wait for "key documents" before filing in 2023.In a release last week, the IRS urged "early filers" to watch for Form 1099-K, which reports income for third-party payment networks such as Venmo or PayPal."A little extra caution" could save time and effort, the agency said, because if you don't report 1099-K income, you may owe money and need to file an amended return.More from Personal Finance:Tax 'refunds may…

Charday Penn | E+ | Getty ImagesIf you've accepted payments via apps such as Venmo or PayPal in 2022, you may receive Form 1099-K, which reports income from third-party networks, in early 2023. But there's still time to reduce your tax liability, according to financial experts. "There's no change to the taxability of income," the IRS noted in a release Tuesday about preparing for the upcoming tax season. "All income, including from part-time work, side jobs or the sale of goods is still taxable," the agency added.Before…

Tom Werner | DigitalVision | Getty ImagesCertain tax credits have been reduced One possible reason for a smaller tax refund is the child tax credit and the child and dependent care tax credit have been reduced for 2022, explained certified financial planner Cecil Staton, president and wealth advisor at Arch Financial Planning in Athens, Georgia.While both tax credits received a temporary boost through the American Rescue Plan of 2021, the enhanced tax breaks were not extended to 2022. "The big picture is a lot of people…