How much Roth conversion?

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Nyc10036
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How much Roth conversion?

Post by Nyc10036 » Thu Aug 10, 2017 4:49 pm

My earned income this year looks like it will be about $5K. :(
My interest and dividend will be offset by the standard deduction.

How much of my tIRA can I convert and stay below 15% tax rate?

livesoft
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Re: How much Roth conversion?

Post by livesoft » Thu Aug 10, 2017 5:24 pm

Not enough info. You didn't tell us your complete financial picture including screen shots of your expected 2017 tax return. Basic things like are you filing married or single etc etc.

OTOH, you can convert all you want and then recharacterize some of it back to your tIRA before October 2018, so it really doesn't matter what our answer might be.

And I can tell you that my earned income will be less than $5,000 for 2017. I will contribute the legal maximum of that to my 401(k), that is, almost all, but not quite all, of it. I won't do any Roth conversions, but I have completed all possible conversions for myself. However, my spouse will be continuing to do Roth conversions. How much? Lots. And no, I will not post screen shots of our tax return.
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squeat
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Re: How much Roth conversion?

Post by squeat » Thu Aug 10, 2017 5:44 pm

Add up standard deduction, personal exemption(s) and tax brackets for your marriage status. Subtract out the $5k of income and interest/dividend income to figure out how much you have left to fill up the 15% bracket.

Click here for info on the brackets.

livesoft
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Re: How much Roth conversion?

Post by livesoft » Thu Aug 10, 2017 5:45 pm

OP did not mention the $148,119 in unearned, passive investment income that they will have. Yes, they mentioned interest and dividends, but there is other income, too.
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mhalley
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Re: How much Roth conversion?

Post by mhalley » Thu Aug 10, 2017 6:10 pm

You might run your numbers in taxcaster.

https://turbotax.intuit.com/tax-tools/c ... taxcaster/

Nyc10036
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Re: How much Roth conversion?

Post by Nyc10036 » Thu Aug 10, 2017 6:31 pm

livesoft wrote:OP did not mention the $148,119 in unearned, passive investment income that they will have. Yes, they mentioned interest and dividends, but there is other income, too.
If there was other income I would have mentioned it, so I would not be thinking about this.

Nyc10036
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Re: How much Roth conversion?

Post by Nyc10036 » Thu Aug 10, 2017 6:39 pm

squeat wrote:Add up standard deduction, personal exemption(s) and tax brackets for your marriage status. Subtract out the $5k of income and interest/dividend income to figure out how much you have left to fill up the 15% bracket.

Click here for info on the brackets.
Thanks!
Straightforward math.

Nyc10036
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Re: How much Roth conversion?

Post by Nyc10036 » Thu Aug 10, 2017 6:40 pm

mhalley wrote:You might run your numbers in taxcaster.

https://turbotax.intuit.com/tax-tools/c ... taxcaster/
Thanks!

Downloading the app.

The Wizard
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Re: How much Roth conversion?

Post by The Wizard » Thu Aug 10, 2017 6:41 pm

Livesoft is being facetious :annoyed but yes, we need more info.
Let's start with filing status, AGI, and Taxable Income, prior to any Roth conversion...
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David Jay
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Re: How much Roth conversion?

Post by David Jay » Thu Aug 10, 2017 6:46 pm

Great that you have this year to do a tax-free Roth conversion. Sorry about the low income...

Here is a related thread, tax-free conversions for us older folks: viewtopic.php?f=10&t=224985
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kaneohe
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Re: How much Roth conversion?

Post by kaneohe » Thu Aug 10, 2017 7:05 pm

Nyc10036 wrote:...........................

How much of my tIRA can I convert and stay below 15% tax rate?
Did you mean < 15% ; therefore 10%
or did you mean below the top of the 15% bracket?

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FiveK
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Re: How much Roth conversion?

Post by FiveK » Thu Aug 10, 2017 8:18 pm

mhalley wrote:You might run your numbers in taxcaster.
livesoft wrote:OTOH, you can convert all you want and then recharacterize some of it back to your tIRA before October 2018, so it really doesn't matter what our [TaxCaster's] answer might be.
In other words, TaxCaster has so many simplifications that it isn't something you want to trust by itself, and you won't know "for sure" until you do a real 2017 return.

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BL
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Re: How much Roth conversion?

Post by BL » Sat Aug 12, 2017 7:47 am

If you want to get really close to the top of the 15% bracket without going over it, or just really close to top of 10% bracket, I suggest you get a last year's real tax program (such as Turbo Tax or H&R Block-some should be really cheap now) and run the figures more exactly. There could be lower-income credits you are eligible for (may depend on age) that Taxcaster does not account for. Health care subsidies depend on AGI income and Taxable Income, IIRC.

It also is important to know your approximate age and the amount you have in a trad. IRA. It might not make sense to convert if you don't have the extra cash or taxable account to cover the taxes. Yes, that could be taken out of the conversion, but then you would be lowering your investment total, and there would also be a 10% penalty for taking it out before you are old enough. What are you living on?

So you see, it may not be a simple problem since we don't know your situation. You may want to stop at top of 0% bracket, 10% bracket, or 15% bracket. Those % show what you have to pay to do a conversion.

You will have to fill out Form 8086 (real tax program should do this) for a Roth conversion, and send it in with your taxes. Otherwise you would owe a penalty on early withdrawal, if you are under 59.5 years of age.

cherijoh
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Re: How much Roth conversion?

Post by cherijoh » Sat Aug 12, 2017 8:20 am

FiveK wrote:
mhalley wrote:You might run your numbers in taxcaster.
livesoft wrote:OTOH, you can convert all you want and then recharacterize some of it back to your tIRA before October 2018, so it really doesn't matter what our [TaxCaster's] answer might be.
In other words, TaxCaster has so many simplifications that it isn't something you want to trust by itself, and you won't know "for sure" until you do a real 2017 return.
Taxcaster is still better than providing an anonymous internet board with sketchy information and expecting an accurate answer. :wink:

indexonlyplease
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Re: How much Roth conversion?

Post by indexonlyplease » Sat Aug 12, 2017 9:43 am

livesoft wrote:
Thu Aug 10, 2017 5:24 pm
Not enough info. You didn't tell us your complete financial picture including screen shots of your expected 2017 tax return. Basic things like are you filing married or single etc etc.

OTOH, you can convert all you want and then recharacterize some of it back to your tIRA before October 2018, so it really doesn't matter what our answer might be.

And I can tell you that my earned income will be less than $5,000 for 2017. I will contribute the legal maximum of that to my 401(k), that is, almost all, but not quite all, of it. I won't do any Roth conversions, but I have completed all possible conversions for myself. However, my spouse will be continuing to do Roth conversions. How much? Lots. And no, I will not post screen shots of our tax return.
You are funny. No screen shots.

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