2011 tax rates and roth conversions
Currently if you convert tradtional IRA monies to Roth IRA in 2010 you have the capability to report the income over the 2011 & 2012 tax years. The catch was that the marginal tax rates werer to be higher in those years. Has anyone seen or discussed the possibility of any change to this if/when the current tax rates aer extended? It seems if a person will have around the same taxable income in years 2010, 2011 & 2012 then they should lean towards deferring reporting the conversion income over the 2011 & 2012 tax years since the rates will be the same.
Am I mistaken in this?
Thanks in advance,
Permalink Submitted by Alan Spross on Wed, 2010-12-15 19:11
If everything else is equal, the extension of the expiring tax rates would make the two year deferral more attractive because the higher rates will most likely be off the table until 2013. But there may be changes in your own personal tax situation that results in a spike or drop of income in those years, so all factors need to be considered. And if things change, the final date to make the election is 10/17/2011 and by that time you should have a good idea of what your 2011 total tax picture looks like as well as 2010.