2007-03-21 20:33:59 · 3 answers · asked by Kathie B 2 in Business & Finance ➔ Taxes ➔ United States
Better whip out the credit card!
You can't take any more 401(k) deductions for 2006. Unlike an IRA, there is no "grace period" for 401(k) deductions that would allow you to add anything to it after the end of the tax year. And you can't just write a check and deposit it to your 401(k) plan. A 401(k) is a salary reduction plan, not a depository account.
You MIGHT be able to open an IRA and make a deductible contribution to it. You have until April 17, 2007 to do that. However since you are covered by an employer sponsored retirement plan there are income limits that may bar the deductiblity of any IRA contributions. For a single taxpayer, the deduction starts to fade when your AGI hits $50,000 and is gone when it hits $60,000.
2007-03-21 20:58:17 · answer #1 · answered by Bostonian In MO 7 · 2⤊ 0⤋
Since you can not put anything more into your 2006 401k then youm definately need to use your credit card to pay what you owe the IRS. The interest on the credit card most likely will be lower than what the government will charge in penalty and interest, even if you make an agreement with them!
2007-03-22 13:26:50 · answer #2 · answered by Mom of 2 4 · 0⤊ 0⤋
Pay what you owe, however you need to. Then pay off the credit card as soon as possible.
2007-03-22 08:10:45 · answer #3 · answered by CarVolunteer 6 · 0⤊ 0⤋