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Paying the Taxes on Your Roth Conversion

Posted by Cheryl Costa  March 9, 2010 09:26 AM

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We've talked about many of the finer points on paying the taxes due on a Roth Conversion in 2010.  One of the special aspects of converting in 2010 is that you can opt to defer the taxes that would be due and report half the income in 2011 and the other half in 2012.  Despite the fact that tax rates are expected to rise in 2011 and 2012, many people will want to defer the payment of the conversion taxes.  But, did you know that if you elect to defer the payment for one Roth conversion, that election applies to any and all conversions you make that year?  That is, you can't convert two different IRAs and elect a different tax treatment for each conversion.  However, in a somewhat surprising twist, couples who each do a Roth conversion can elect different tax treatments.  For example, the husband could elect to defer the taxes while the wife may chose to pay the taxes in 2010.

 

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