Downside is that HR Block (the software I used in the past) couldnt 1) properly do accrued market discounts on Treasuries and in general had a horrid time handling the tax documents from my brokerage account and 2) didn’t allow me to properly input tax due on HSA overcontribution.mhc wrote: Wed Jan 15, 2025 9:31 amThis is no big deal if you use tax software. It is no extra work. It is not unusual for someone to pick up a dollar or so before the Roth conversion occurs. I have done this many times, and I do not recall that it takes any extra work.InvisibleAerobar wrote: Tue Jan 14, 2025 8:23 pm Now I'll have to read up on how to deal with the ~$16 earned in interest, which is not only taxable but also requires a bit more processing on the 8606 form.
Issue 2) is (hopefully) an one-time thing, but issue 1) makes me doubt as to whether the same software could properly manage Form 8606.
Good thing is that i don’t have to deal with it until Feb. 2026, but i don’t have high hopes that Turbo Tax would be drastically better than HR Block.
Just to clarify, for simplicity, I should just convert the entirety of $7016 all in one go in 2025, correct?volstagg wrote: Wed Jan 15, 2025 10:33 amTotally, you'll get a 1099-R from Fidelity, put the numbers into the tax software regardless of if the rollover was $7000 or $7016, the tax software will deal with form 8606. Only net impact is going to be you're going to pay taxes on that $16 for the rollover.mhc wrote: Wed Jan 15, 2025 9:31 am
This is no big deal if you use tax software. It is no extra work. It is not unusual for someone to pick up a dollar or so before the Roth conversion occurs. I have done this many times, and I do not recall that it takes any extra work.
Next year, push the funds into your CMA or Brokerage account directly, then you can do the tIRA contribution and rollover same or next business day without the hold.
I was reading up on WhiteCoat Investor’s blog specifically on the issue of additional dollar (or more) accrued btwn contribution and conversion, and right at the end, despite what appears to be otherwise endorsement for complete conversion, he also mentioned converting the excess amount next year (in my case that would be $16 and interest earned on that $16). My very layperson’s reading is that this represents a “could do” but not a “should do”, as I would assume doing so gets one mired into pro-rata calculations at a future time.