2010 Roth Conversion & Tax Interest/Penalties
I did a Roth conversion in 2010 and last year I did my own taxes (Tax Cut H&R Block. I owed taxes on 50% of the conversion amount but my tax program did not assess interest or penalties for underpayment. I had a CPA check my return and his tax program assessed interest and penalties…..Who’s right???
thanks
Kevin
Permalink Submitted by Alan - IRA critic on Mon, 2013-04-01 16:49
Most likely the CPA. The same rules apply to the last half of the conversion income as would apply to any other shortfall in estimates or withholding for the tax year. Perhaps the more basic tax programs do not include late interest penalties and some taxpayers prefer to file and let the IRS bill them for the penalty given the possibility that they will not. Another possibility is that you qualify for a safe harbor and that requires knowing your tax liability for 2011 and your tax program does not collect that information. If the CPA program assessed penalties, you should get a breakdown what they are since there are more than one that could apply.