2012 Partial Roth Conversion

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2012 Partial Roth Conversion

Postby CaliJim » Fri Apr 05, 2013 12:03 am

On 11/14/2012 - I did another partial roth conversion.
In late March 2013 - I finished doing my tax returns (fed and state)
Tonight - I did some "what if's" tax scenarios. What if I hadn't done the Roth conversion - what would my taxes have been.
Now I have a head ache. :annoyed
Actual Effective tax rate (Fed+State) = 7.33%
What If No Roth Conversion Effective tax rate (Fed+State) = 1.45%
The marginal tax rate on my Roth conversion was 28% :oops: Ugh! Looks like I overshot the runway.
Livesoft's (viewtopic.php?t=87471) "How to pay ZERO taxes in retirement" eluded me this year. Dang.

There's no way I can claw back that Roth conversion or re-characterize it or anything, is there?
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Re: 2012 Partial Roth Conversion

Postby Iorek » Fri Apr 05, 2013 12:19 am

IIRC you can recharacterize up until Oct 15.

I guess I'm a little confused-- by its nature as elective income a Roth conversion will effectively always be taxed at your marginal tax rate. Were you surprised at being bumped to a higher marginal tax rate?
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Re: 2012 Partial Roth Conversion

Postby CaliJim » Fri Apr 05, 2013 12:26 am

I miscalculated what bracket I'd be in. Too much dividend income late in the year. Too few deductions after paying off the mortgage.

But mostly .... disappointed in my failure to pay ZERO taxes like my "tax dodging" idol.

Thanks for the 10/15 date.
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Re: 2012 Partial Roth Conversion

Postby Default User BR » Fri Apr 05, 2013 1:35 am

Don't file your return until you take care of the recharacterization. Submit an extension as needed.


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Re: 2012 Partial Roth Conversion

Postby CaliJim » Fri Apr 05, 2013 4:40 pm

More good advice. Thanks Brian.
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