Search found 15549 matches

by FiveK
Mon Mar 18, 2024 10:21 pm
Forum: Personal Finance (Not Investing)
Topic: Taxes using 1040.com, and foreign tax credit
Replies: 5
Views: 240

Re: Taxes using 1040.com, and foreign tax credit

In that case, you shouldn't need to enter anything other than what is on your 1099-DIV (see p. 102 of https://www.irs.gov/pub/irs-pdf/i1040gi.pdf) but 1040.com might want the info "just in case". The Vanguard consolidated statement should add up the individual distributions for you. E.g., $XXX.XX Total Dividends & distributions $ -YY.YY Total Foreign tax withheld Just use the first line if you have something like VNGRD TTL INTL STK ADML (VTIAX) in which ~100% of the amounts have foreign sources. It appears that 1040.com does need it "just in case" - unfortunately, they REQUIRE it. And, not knowing where it will be used, I want to enter correct info. I have 3 funds that list foreign tax paid: VSGCX, VTIAX, VTABX. The...
by FiveK
Mon Mar 18, 2024 9:31 pm
Forum: Personal Finance (Not Investing)
Topic: Taxes using 1040.com, and foreign tax credit
Replies: 5
Views: 240

Re: Taxes using 1040.com, and foreign tax credit

Cara wrote: Mon Mar 18, 2024 9:16 pm
FiveK wrote: Mon Mar 18, 2024 8:47 pm What is your total?
It is WELL under $600 - less than $20!
In that case, you shouldn't need to enter anything other than what is on your 1099-DIV (see p. 102 of https://www.irs.gov/pub/irs-pdf/i1040gi.pdf) but 1040.com might want the info "just in case".

The Vanguard consolidated statement should add up the individual distributions for you. E.g.,
$XXX.XX Total Dividends & distributions
$ -YY.YY Total Foreign tax withheld

Just use the first line if you have something like VNGRD TTL INTL STK ADML (VTIAX) in which ~100% of the amounts have foreign sources.
by FiveK
Mon Mar 18, 2024 9:18 pm
Forum: Personal Investments
Topic: Basis Still Showing on Form 8606 even though no money is left in tIRA?
Replies: 7
Views: 1467

Re: Basis Still Showing on Form 8606 even though no money is left in tIRA?

Now obviously my conversion shows a $0 basis left on line 14 which is accurate even though due to the rounding on the form it technically shows the non taxable amount was $12,502 when really it was $12,500. I am less concerned about this as it shows I have no basis left and the rounding is to my advantage here. Except there is no "if the answer is less than zero enter zero" qualifier for line 14, so by the instructions it should be -2. For my wifes 2024 form 8606 will she then just start with $1 of basis on line 2 even though there was $0 left in my wifes tIRA? Yes. Not a problem at all. As todd suggested, rounding to four decimal places, 0.9988, would make both forms look "as expected". A question regarding you initial...
by FiveK
Mon Mar 18, 2024 9:07 pm
Forum: Personal Investments
Topic: How Much to Convert to Roth?
Replies: 11
Views: 847

Re: How Much to Convert to Roth?

They incline to take SS next year (FRA age 67). Their normal marginal tax bracket has been 24% in recent years. The higher earner (or perhaps both) might want to wait until age 70. See https://opensocialsecurity.com/ and also consider that SS income will interfere with Roth conversions. Given the size of t-IRA and age, what is the best way trying to reach tax equilibrium going forward? How much to convert to Roth each year before RMD; up to the 24% tax bracket? Have they been in the 24% bracket without any Roth conversions, or have they been doing some? The goal is tax efficiency during their life time and if possible, leave money in Roth/after tax account for their heirs. I understand that there are many uncertainties for the future. Any ...
by FiveK
Mon Mar 18, 2024 8:47 pm
Forum: Personal Finance (Not Investing)
Topic: Taxes using 1040.com, and foreign tax credit
Replies: 5
Views: 240

Re: Taxes using 1040.com, and foreign tax credit

If your foreign tax total of https://www.irs.gov/pub/irs-pdf/f1099div.pdf box 7 and https://www.irs.gov/pub/irs-pdf/f1099int.pdf box 6 is under $600, this gets much easier than if >$600.

What is your total?
by FiveK
Mon Mar 18, 2024 2:20 pm
Forum: Personal Investments
Topic: Traditional IRA versus 529 versus 401k - order of priority advice
Replies: 22
Views: 756

Re: Traditional IRA versus 529 versus 401k - order of priority advice

letahl wrote: Mon Mar 18, 2024 2:06 pm...it looks like a single/HOH making over $80k ish can't get a deduction for traditional IRA contribution -- am I reading that right? Does that make the traditional ira no longer "tax advantaged"? Am I thinking of that right?
Yes.
If he's in the window where a traditional IRA contribution isn't tax deductible (if I'm reading that right), then Roth would be The Way, right? (He currently does not have either outside of his 401k - which is traditional).
Yes, when choosing between traditional vs. Roth IRAs. If income goes above the direct Roth contribution limit, there is the backdoor Roth process.
by FiveK
Mon Mar 18, 2024 1:23 pm
Forum: Personal Finance (Not Investing)
Topic: Do I need to file amended Form 8606?
Replies: 7
Views: 505

Re: Do I need to file amended Form 8606?

We're wolves wrote: Mon Mar 18, 2024 1:03 pm 1. ...suggest that you document the errors in your own records but not to file anything, and that the IRS won't do anything with the amended forms anyway.
That seems reasonable.
2. Second, assuming I do need to file amended 8606 forms....
N/A based on #1.
by FiveK
Mon Mar 18, 2024 12:13 pm
Forum: Personal Investments
Topic: Traditional IRA versus 529 versus 401k - order of priority advice
Replies: 22
Views: 756

Re: Traditional IRA versus 529 versus 401k - order of priority advice

letahl wrote: Mon Mar 18, 2024 11:39 am
terran wrote: Mon Mar 18, 2024 10:48 am This is a good resource for these kinds of decisions: https://www.bogleheads.org/wiki/Priorit ... nvestments
I am very familiar with this chart! But I don't see how it answers my question past the 4% match? That is why I am asking, please forgive me for not understanding.
The match is Step 2. See the steps below that.

See also the Investment Order post that says pretty much the same things but in different words. Perhaps the wording there will be more helpful to you.
by FiveK
Sun Mar 17, 2024 10:50 pm
Forum: Personal Finance (Not Investing)
Topic: IRS says I owe it money, but I don't
Replies: 28
Views: 3363

Re: IRS says I owe it money, but I don't

effillus wrote: Sun Mar 17, 2024 8:32 pm This weekend I received a letter from the IRS saying I owe approximately $5,900 in income taxes for 2023....
Such letters usually have instructions for what you should do if you disagree. What does your letter say?
by FiveK
Sun Mar 17, 2024 10:16 pm
Forum: Personal Investments
Topic: Trad IRA to Roth IRA Conversion Help - taxable portion
Replies: 8
Views: 795

Re: Trad IRA to Roth IRA Conversion Help - taxable portion

My plan is to leave American Century entirely and convert over to Roth Vanguard. Is there another way to go about this? Work with the receiving brokerage (Vanguard in your case) to have them "pull" funds from the sending brokerage. Check to see if there is a significant cost difference between AC and Vanguard for selling the current investment. In general it should be easier to transfer "in kind" from AC to Vanguard and then do the Roth conversion within Vanguard, and you would do otherwise only if Vanguard will charge you much to dispose of the AC fund. Having your wife adjust her W-2 W-4 withholding so the two of you fit into any of the Safe harbors that avoid underpayment penalties is one good way to handle the conve...
by FiveK
Sun Mar 17, 2024 9:28 pm
Forum: Personal Investments
Topic: TIRA or RIRA
Replies: 4
Views: 386

Re: TIRA or RIRA

In addition to the t vs. R choice, see Prioritizing investments - Bogleheads for a broader view.
by FiveK
Sun Mar 17, 2024 4:04 pm
Forum: Personal Investments
Topic: Roth Conversion - pro rata
Replies: 3
Views: 464

Re: Roth Conversion - pro rata

ddantes64, welcome to the forum.

Yes, you will be subject to the pro rata rule as calculated on Form 8606.
by FiveK
Sun Mar 17, 2024 4:02 pm
Forum: Personal Investments
Topic: Trad IRA to Roth IRA Conversion Help - taxable portion
Replies: 8
Views: 795

Re: Trad IRA to Roth IRA Conversion Help - taxable portion

I have been browsing the BogleHeads Tax Estimation tools and I am a bit lost. Any of those that fit your situation should give the same result. We have used the personal finance toolbox one and had it match our TurboTax-filed federal return to the dollar for the past several years. Do you have specific questions about it or one of the others? Confirming others' advice, do not have taxes withheld from the Roth conversion. Because you are under age 59.5 you will be assessed a 10% penalty for "early distribution" on the withheld amount. Having your wife adjust her W-2 W-4 withholding so the two of you fit into any of the Safe harbors that avoid underpayment penalties is one good way to handle the conversion tax. ETA: fix typo
by FiveK
Sun Mar 17, 2024 3:52 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor roth - I think I may have messed up - quick questions
Replies: 2
Views: 316

Re: Backdoor roth - I think I may have messed up - quick questions

Did you have any earnings on the $12K before converting?

If so, the simplest thing to do would have been to convert everything, instead of leaving a few pennies or dollars in the tIRA. That's water under the bridge (although if you had a non-zero tIRA balance on 31-Dec-2023 that needs to go on line 6 of TY2023 form 8606), but going forward just convert it all.
by FiveK
Sun Mar 17, 2024 3:30 pm
Forum: Personal Finance (Not Investing)
Topic: FICA + Medicare taxes on 457b nongovt distributions or not?
Replies: 3
Views: 344

Re: FICA + Medicare taxes on 457b nongovt distributions or not?

FICA on distributions from (tax-exempt non-gov) 457b plans? - Bogleheads.org may also interest you, and confirm that FICA tax is unlikely to be imposed on your 457b distributions.
by FiveK
Sun Mar 17, 2024 1:50 pm
Forum: Personal Finance (Not Investing)
Topic: Roth Conversions and Turbotax issue
Replies: 8
Views: 918

Re: Roth Conversions and Turbotax issue

Bunty wrote: Sun Mar 17, 2024 12:51 am I am having issues working with Turbotax on this. It is not considering 100% of the funds converted to Roth as taxable.
What are all the non-zero line items on your Form 8606?
by FiveK
Sun Mar 17, 2024 1:26 pm
Forum: Personal Investments
Topic: ETF vs Index Fund
Replies: 6
Views: 808

Re: ETF vs Index Fund

by FiveK
Sun Mar 17, 2024 1:24 pm
Forum: Personal Finance (Not Investing)
Topic: FICA + Medicare taxes on 457b nongovt distributions or not?
Replies: 3
Views: 344

Re: FICA + Medicare taxes on 457b nongovt distributions or not?

457b deductions, same as for 401k and 403b, are taken after FICA tax is assessed, so no FICA tax should be assessed when withdrawing from those accounts.

See Payroll deductions - Bogleheads.

457f plans may differ. See FICA Tax Withholding and Reporting for Section 457(b) and 457(f) Nonqualified Deferred Compensation Plans.
by FiveK
Fri Mar 15, 2024 7:24 pm
Forum: Personal Finance (Not Investing)
Topic: Which debt should I tackle first?
Replies: 6
Views: 530

Re: Which debt should I tackle first?

Dabeachi wrote: Fri Mar 15, 2024 6:04 pm HELOC: 10.24 %
Dabeachi wrote: Fri Mar 15, 2024 7:10 pm Yes, I itemize. Marginal tax rate is 24%
In that case the HELOC costs you 10.24% * (1 - 24%) = 7.8%.

If the pool loan interest is not itemizable then paying ahead on the pool loan works better.
by FiveK
Fri Mar 15, 2024 1:12 pm
Forum: Personal Investments
Topic: Help: Finally trying Backdoor Roth after delaying for so many years
Replies: 8
Views: 783

Re: Help: Finally trying Backdoor Roth after delaying for so many years

3. Will convert (in Mar 17th 2024) $(13500 + 803.8)= $14303.8 of tIRA to Roth IRA in Vanguard Form 8606 for Tax Year 2023. ... That Form 8606 looks good. For the Calendar Year 2024 since I would convert to Roth, it would look something like this, when I file next year. Form 8606 (Tax Year 2024) 8 Amount of Traditional IRAs converted 38303.8 That is inconsistent with the "in Mar 17th" note above, but if that note is incorrect and you do make a complete conversion, the 2024 Form 8606 looks good. At least, both years match what the 'Form8606' tab in the personal finance toolbox generates given your inputs and forcing use of only Form 8606. Tax software often uses a Pub. 590-B worksheet instead of some lines on the 8606.
by FiveK
Thu Mar 14, 2024 11:43 pm
Forum: Personal Investments
Topic: SEP IRA and Backdoor Roth IRA?
Replies: 3
Views: 389

Re: SEP IRA and Backdoor Roth IRA?

It won't make use of the backdoor process illegal, but it may make it unattractive. A SEP is counted the same as any other traditional IRA when it comes to line 6 of Form 8606, and the pro-rata implication that entails.
by FiveK
Wed Mar 13, 2024 8:09 pm
Forum: Personal Investments
Topic: 80 year old mother's retirement accounts
Replies: 23
Views: 2107

Re: 80 year old mother's retirement accounts

ILikeFinances, welcome to the forum. People could guess or make generic recommendations (e.g., "have the receiving brokerage take the lead to pull the funds from the current brokerages") but see Asking Portfolio Questions - Bogleheads.org for a format that will get you more specific advice. Good luck! Thank you! I am so new, so I really appreciate this guidance. My mother has emergency funds, no debt, her tax filing status is single, I'm not sure what her tax rate is (or even what mine is, what is that?), she lives in Michigan, she's 80, and she has about $60,000 invested. See Marginal tax rate and Taxation of Social Security benefits for some reading on tax rates. It may seem laborious, but the effort to edit your opening post h...
by FiveK
Wed Mar 13, 2024 4:59 pm
Forum: Investing - Theory, News & General
Topic: Calculating Time to $1MM and each $100k
Replies: 22
Views: 3119

Re: Calculating Time to $1MM and each $100k

=NPER(7%,-10000,-starting_amount,starting_amount+100000,0) in Excel will match that chart's assumptions.

You timing will depend on your assumptions. Even more, it will depend on what actually happens.
by FiveK
Wed Mar 13, 2024 12:08 pm
Forum: Personal Finance (Not Investing)
Topic: Question about long term capital gains and taxes
Replies: 6
Views: 491

Re: Question about long term capital gains and taxes

Dabeachi wrote: Wed Mar 13, 2024 11:54 amMy question has more to do with where is the capital gains tax noted on the return?
See p. 37 in https://www.irs.gov/pub/irs-pdf/i1040gi.pdf.
by FiveK
Tue Mar 12, 2024 9:01 pm
Forum: Personal Investments
Topic: 80 year old mother's retirement accounts
Replies: 23
Views: 2107

Re: 80 year old mother's retirement accounts

ILikeFinances, welcome to the forum.

People could guess or make generic recommendations (e.g., "have the receiving brokerage take the lead to pull the funds from the current brokerages") but see Asking Portfolio Questions - Bogleheads.org for a format that will get you more specific advice. Good luck!
by FiveK
Mon Mar 11, 2024 9:37 pm
Forum: Personal Finance (Not Investing)
Topic: Form 8606 tax filing questions (backdoor Roth IRA)
Replies: 6
Views: 595

Re: Form 8606 tax filing questions (backdoor Roth IRA)

joneeboy3000 wrote: Mon Mar 11, 2024 9:24 pm Thanks :) Just to clarify, do you think putting $0 this year (instead of $6000) on line 2 and 14 of Form 8606 is the way to go
Yes, because that is correct.
or should I still put the $6000 (even though it’s wrong)?
No, because that's wrong. ;)
Also, in the case that the IRS flags that because it doesn’t match prior years’ total basis, this has no bearing on my taxes owed now or later, right, so what would they do?
Probably nothing, because it seems you have the correct taxable income on form 1040 line 4. In the unlikely event they do ask for some documentation just give them what they ask for.
by FiveK
Mon Mar 11, 2024 7:53 pm
Forum: Personal Investments
Topic: SS is insufficient, very little savings, what's the best option
Replies: 49
Views: 7793

Re: SS is insufficient, very little savings, what's the best option

stevem54 wrote: Mon Mar 11, 2024 7:02 pm Why is Fidelity better?
Because they charge less than EJ for better investment options. See Getting started - Bogleheads for some background on that conclusion.
And, will they offer financial advice given such a low asset level? I see that Vanguard requires $50k investment in order to qualify for PAS.
Without the advisor having a working crystal ball, the best financial advice will likely differ very little from suggestions given by previous posters. That is, keep investments on the safe side while building the invested assets balance. Prioritizing investments might be worth considering over the next several years.
by FiveK
Mon Mar 11, 2024 7:42 pm
Forum: Personal Finance (Not Investing)
Topic: Father died and I'm totally overwhelmed on what to do
Replies: 58
Views: 10972

Re: Father died and I'm totally overwhelmed on what to do

trilobyte wrote: Mon Mar 11, 2024 7:34 pm I do have a silly tax question. I think I have enough information to file my mom & dad's 2023 return. Should I file this under my mom as "married, jointly"? Does dad's death need to be noted at all? Dad died after 2023, but before its tax return is due.
Both your parents' names will go on the MFJ return, and there should be a note that your dad is deceased with the date of death. Other than that (and only your mom's signature required), the return will be the same as if both were still living.
by FiveK
Mon Mar 11, 2024 6:00 pm
Forum: Personal Finance (Not Investing)
Topic: Form 8606 tax filing questions (backdoor Roth IRA)
Replies: 6
Views: 595

Re: Form 8606 tax filing questions (backdoor Roth IRA)

joneeboy3000 wrote: Mon Mar 11, 2024 5:54 pm "What do you have on your 2021 Form 1040 lines 4a and 4b? Same question for 2022?"
2021 line 4a: $6306, line 4b: $306
2022: line 4a: $6000, line 4b: $0

Does this look right, or do I need to take any action? I really appreciate your help..
Those look correct, so letting sleeping dogs lie (i.e., not trying to fix the incorrect form 8606 entries that would not change your bottom line) would be reasonable.

Do look to get the 2023 version of form 8606 correct ;) and good luck. :)
by FiveK
Mon Mar 11, 2024 5:31 pm
Forum: Personal Finance (Not Investing)
Topic: Form 8606 tax filing questions (backdoor Roth IRA)
Replies: 6
Views: 595

Re: Form 8606 tax filing questions (backdoor Roth IRA)

As I’m now starting to file this year’s 2023 backdoor Roth IRA in FreeTaxUSA, I noticed the tax software wants to import a $6,000 total basis when it asks, "Have you ever had a non-deductible traditional IRA contribution on any prior year tax return", as that’s what I had (a $6,000 basis) on my 2022 and 2021 form 8606 Lines 2 and 14. 2021 tax year was my first backdoor Roth IRA. That year I had to re-characterize my $6,000 initial Roth contribution to Traditional, in order to then convert it to Roth, because I realized mid 2021 I would be making too much money for a pure Roth IRA contribution. This all happened in May 2021. I had to pay $306 in taxes on this as it had gone up by this much by the time I re-characterized and conver...
by FiveK
Mon Mar 11, 2024 1:46 pm
Forum: Personal Finance (Not Investing)
Topic: Taxes for Roth IRA Recharacterization and Conversion
Replies: 7
Views: 434

Re: Taxes for Roth IRA Recharacterization and Conversion

Vanguard...did a RECHARACTERIZATION of her Roth IRA (now grown to $6900) into a ROLLOVER IRA, and then a CONVERSION of $6900 back into her Roth IRA. This recharacterization event happened FEB 2024 She does not have a traditional IRA - only a rollover IRA, so Vanguard recharacterized the $6900 into the rollover IRA, and then converted all of the $6900 into her roth IRA. Thankfully at the end of the year her rollover IRA value was $0. There's a conflict between those two quotes. Per the first, the rollover IRA value at the end of 2023 was not $0. Instead, it was whatever the value was in the Roth account due to the initial $6500 contribution and investment results. If she did not do a conversion in 2023, it probably doesn't matter, but just ...
by FiveK
Mon Mar 11, 2024 10:49 am
Forum: Personal Finance (Not Investing)
Topic: W4 withholding
Replies: 8
Views: 714

Re: W4 withholding

Tideout wrote: Mon Mar 11, 2024 8:19 amI need to pay LESS tax on my paychecks.... Can this be done thru the W4?
Yes, by entering the desired amount in step 3 of https://www.irs.gov/pub/irs-pdf/fw4.pdf.
by FiveK
Mon Mar 11, 2024 3:43 am
Forum: Personal Finance (Not Investing)
Topic: How to Estimate Taxes on RMDs
Replies: 7
Views: 1126

Re: How to Estimate Taxes on RMDs

catchinup wrote: Sun Mar 10, 2024 5:34 pm I would like to estimate state and federal income tax assuming standard deductions on pre-tax withdrawals from a 401k or IRA.
What you have looks accurate enough for what you want.

If you want more details, consider the Tax estimation tools covered there. There are two downloadable spreadsheets in that mix. One is prettier while the other lets you see the formulas.
by FiveK
Sun Mar 10, 2024 12:52 pm
Forum: Personal Finance (Not Investing)
Topic: How much Roth Conversion should I plan on?
Replies: 18
Views: 2500

Re: How much Roth Conversion should I plan on?

Cg2 wrote: Sat Mar 09, 2024 4:51 pm ...(plus add sale of DW's business this year (~ 400-450K--no idea how much after taxes))...
If that $400-$450K will be taxable income (even if LTCG) then this year is probably not a good year for Roth conversions.

Some suggested reading (ignore the ACA one if that won't apply to you):
Roth conversion
Roth Conversion and Capital Gains On ACA Health Insurance
Roth Conversion with Social Security and Medicare IRMAA
Worth pushing through the Social Security hump and/or IRMAA cliffs?
by FiveK
Sun Mar 10, 2024 11:23 am
Forum: Personal Investments
Topic: Newly Retired: Start Roth Conversions For IRA or Not?
Replies: 39
Views: 5314

Re: Newly Retired: Start Roth Conversions For IRA or Not?

smitcat wrote: Sun Mar 10, 2024 10:21 am
WoodSpinner wrote: Sun Mar 10, 2024 10:19 am The only case I know of for an immediate breakeven point involves a Deathbed Conversion which will save hoers in known Marginal Brackets and/or reduce Estate tax bills.

Any others come to mind for you?

WoodSpinner
As one of a few examples....
Roth conversions from Dec. 15 2023 are targeted for heirs. Heirs tax rates at January 1st 2024 are higher than the conversion rates.
And any conversion in a year with a lower marginal tax rate than will apply for any future year.

And any conversion with the conversion tax paid from cash on hand with an equal or lower marginal tax rate than will apply for any future year.
by FiveK
Fri Mar 08, 2024 1:33 pm
Forum: Personal Finance (Not Investing)
Topic: Contributions to tax-deferred or roth 401(k) 3 years from retirement
Replies: 7
Views: 824

Re: Contributions to tax-deferred or roth 401(k) 3 years from retirement

Here's my question: With my planned retirement 3 years away, should my contributions to my 401(k) go to tax-deferred 401(k) to lower my tax bill during accumulation and pay taxes when I'm at a much lower tax bracket during decumulation...? Yes. See the Traditional versus Roth wiki: "The approach that incurs a lower marginal tax rate will, in most cases, provide you more spendable income." Saving 32% now to pay 12% (or even 22% or 25%) later is a good deal. Plan to collect SS at FRA (67) Consider using Open Social Security: Free, Open-Source Social Security Calculator , and also consider (when you get to that point) whether you might want to defer starting SS even further to allow more tax-efficient Roth conversions. You might or ...
by FiveK
Fri Mar 08, 2024 1:23 pm
Forum: Personal Finance (Not Investing)
Topic: Is safe harbor rule for Illinois based on "Illinois base income," NOT "federal adjusted gross income"??
Replies: 3
Views: 385

Re: Is safe harbor rule for Illinois based on "Illinois base income," NOT "federal adjusted gross income"??

Macaroni2314 wrote: Fri Mar 08, 2024 8:39 am 2) I know at the federal level, there's a rule that it's 110% of last year's tax for MFJ over $150k. Does anyone know if it's also 110% for MFJ in Illinois for a certain income?
Not according to https://tax.illinois.gov/content/dam/so ... l-2210.pdf and https://tax.illinois.gov/content/dam/so ... -instr.pdf.
by FiveK
Fri Mar 08, 2024 1:16 pm
Forum: Personal Finance (Not Investing)
Topic: Backdoor Roth and a potential mistake from CPA
Replies: 11
Views: 897

Re: Backdoor Roth and a potential mistake from CPA

Yes.

See "Exception 2" on p. 26 of https://www.irs.gov/pub/irs-pdf/i1040gi.pdf and go from there. Good luck!
by FiveK
Thu Mar 07, 2024 11:06 pm
Forum: Personal Finance (Not Investing)
Topic: Filing 2023 tax return while 2022/2021 amend return filed for missing 8606
Replies: 2
Views: 402

Re: Filing 2023 tax return while 2022/2021 amend return filed for missing 8606

Filing what you know to be a correct Form 8606 for TY2023 now should cause no problems.
by FiveK
Thu Mar 07, 2024 11:05 pm
Forum: Personal Investments
Topic: Out of room in tax advantaged accounts. Now what?
Replies: 7
Views: 1669

Re: Out of room in tax advantaged accounts. Now what?

Because this is in my paste buffer from another topic: ;)
Roth conversion
Roth Conversion and Capital Gains On ACA Health Insurance
Roth Conversion with Social Security and Medicare IRMAA
Worth pushing through the Social Security hump and/or IRMAA cliffs?

It may or may not be worthwhile to do Roth conversions. The articles linked above could help you decide for your specific situation.
by FiveK
Thu Mar 07, 2024 11:01 pm
Forum: Personal Investments
Topic: Roth Conversion better in market downturn?
Replies: 20
Views: 1801

Re: Roth Conversion better in market downturn?

comfortzone wrote: Wed Mar 06, 2024 11:15 pm 66 yr old retiree. Converting from Trad IRA to Roth over the next few years. Hypothetically is converting in a market downturn advantageous?
It makes a "good conversion" (one in which you pay a lower marginal tax rate now than you would in the future) better.

It does not make a "bad conversion" (one in which you pay a higher marginal tax rate now than you would in the future) a good conversion.
by FiveK
Thu Mar 07, 2024 10:58 pm
Forum: Personal Investments
Topic: Newly Retired: Start Roth Conversions For IRA or Not?
Replies: 39
Views: 5314

Re: Newly Retired: Start Roth Conversions For IRA or Not?

Biff wrote: Thu Mar 07, 2024 10:49 am Any general advise on which or other strategy to start?
Acquiring at least some understanding of the following, and doing some of your own analysis as described in the second link, should be useful for you:
Roth conversion
Roth Conversion with Social Security and Medicare IRMAA
Worth pushing through the Social Security hump and/or IRMAA cliffs?
by FiveK
Wed Mar 06, 2024 6:34 pm
Forum: Personal Finance (Not Investing)
Topic: Tax Bracket Confusion
Replies: 11
Views: 1625

Re: Tax Bracket Confusion

For example, a person earns $40k and has a standard deduction. But he/she has a $700k LT capital gain. Does it mean his/her tax bracket is 37%? For a single 2023 filer under age 65, there would be $2,921 tax on ordinary income, and $113,921 tax on the capital gains, and $20,520 NIIT, for a total of $137,362. Another $1000 of ordinary income would increase total tax by - 12% for the ordinary income, plus - 20% for moving $1000 LTCG into the 20% bracket, plus - 3.8% for moving $1000 LTCG into the NIIT range, for a marginal rate of 35.8%. Another $1000 of LTCG would increase total tax by - 20% for moving $1000 LTCG into the 20% bracket, plus - 3.8% for moving $1000 LTCG into the NIIT range, for a marginal rate of 23.8%. Things get separated a...
by FiveK
Wed Mar 06, 2024 6:17 pm
Forum: Personal Finance (Not Investing)
Topic: Looking for Tax advise after recharcterize 2023 roth IRA contribution to TIRA
Replies: 2
Views: 354

Re: Looking for Tax advise after recharcterize 2023 roth IRA contribution to TIRA

If you didn't withdraw/convert any money out of your traditional accounts for a given tax year then there will be no taxable income due to the backdoor Roth process.

Any tax year for which you made a non-deducted traditional contribution requires a Form 8606 to document that - there just won't be any taxable income on that year's 8606.
by FiveK
Wed Mar 06, 2024 6:14 pm
Forum: Personal Finance (Not Investing)
Topic: Pro-rata calculation for IRA for multiple years
Replies: 2
Views: 410

Re: Pro-rata calculation for IRA for multiple years

You might try using the multi-year Form8606 tab in the personal finance toolbox. Change cell C1 to 2021, then enter what you did in the green cells for each year. Note that a recharacterization makes it as if the original contribution was made to the account recharacterized to, and on the date of the original contribution.

If you are using tax software, some lines on form 8606 may be blank because the software uses a worksheet in Pub. 590-B for some calculations. If you want to force use of 8606 in the spreadsheet, see row 57.

Do the resulting calculations look good to you?
by FiveK
Wed Mar 06, 2024 6:05 pm
Forum: Personal Finance (Not Investing)
Topic: Understanding Massachusetts & Federal estimated tax rule differences
Replies: 2
Views: 307

Re: Understanding Massachusetts & Federal estimated tax rule differences

For federal, see Safe harbors.

For MA, see https://www.mass.gov/doc/2023-form-m-22 ... x/download. The MA safe harbors look similar to the federal ones, except
- owe <$400 instead of <$1000
- have paid 80% of current year's tax liability instead of 90%
- have paid 100% of previous year's instead of "100% of previous if previous AGI was <$150K, otherwise 110% of previous"

Doing a draft of the federal and MA forms 2210 by hand, at least through line 9 or 11 of the federal, and line 9 or 13 of MA, is doable and may be very helpful.
by FiveK
Tue Mar 05, 2024 8:23 pm
Forum: Personal Finance (Not Investing)
Topic: Seeking recommendation for personal tax filing
Replies: 1
Views: 322

Re: Seeking recommendation on tax filing

You may have better luck if you edit the title to describe what type of return: small business; complicated (in what way) personal; etc.
by FiveK
Mon Mar 04, 2024 11:42 am
Forum: Personal Investments
Topic: Determining the "contributions" part of Roth IRA
Replies: 47
Views: 3911

Re: Determining the "contributions" part of Roth IRA

...there is going to be NO penalty and NO tax on the earnings of backdoor roth. The word "earnings" needs some definition. Any growth in the few days between contributing to the tIRA and then converting to a Roth IRA is "Conversions, taxable portion", not "earnings". "Earnings" are increases in value after money goes into the Roth IRA. Yes, same understanding. So the growth "in the few days" is just a couple of dollars; while the earnings are the thousands of dollars earned over the many years before I want to withdraw from the backdoor Roth IRA. These thousands of dollars of earnings are also part of "Conversions, taxable portion" row or are they part of "earnings" (las...