Roth IRA Conversion Analysis
www.alanhaft.com Nationally recognized media commentator and author Alan Haft provides an overview of his website that focuses on new tax laws regarding converting taxable IRAs and 401ks into tax free Roths.
Q&A: conversion traditional to roth question?
Question by Mike: conversion traditional to roth question?
i had 5200 in earned income in 2007 so no tax liaibility so decided to convert traditional to roth. on my W4 with my employer i listed a 4000 IRA deduction. Is this a problem? I still won’t owe any taxes in 2007 and had nothing withheld. I just wont list the deduction on my tax return correct since i am now using after tax income in the Roth? Please give me a detailed answer. Thank you!
can i just keep the 4000 deduction and report the 4100 conversion amount on line 15b ira distribution and write “rollover” Thus i would only pay taxes on the earnings. i dont want to file form 8606 unelss i have to. can i do this?
Best answer:
Answer by v b
You have to file form 8606 because you are rolling money over. There is a 5-year clock on rolling IRA money over (without penalty when you take the money out), so you *have* to file the form to track each rollover.
The $ 4000 you keep talking about doesn’t make sense to me. Estimated numbers on your W-4 are just that estimates. They have absolutely nothing to do with your taxes.
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