Roth Conversion in 2010 Taxes 2011 & 2012
Who is eligible for spreading taxes over year 2011 & 2012 When converting in 2010. Is this for qualified plans, or do Traditional IRA qualify as well? Is this a one time exception to spread taxes over two years and only for conversions in 2010? Thanks!
Permalink Submitted by Clyde Wolf on Fri, 2009-04-10 01:00
Bditton,
Anyone owning an IRA can convert to a ROTH IRA in 2010 has the option of paying the taxes with their 2010 tax retrun OR spreading the tax over 2 years and paying the tax, half with the 2011 tax retrun, and half with the 2012 tax retrun.
An inheirted IRA can not be converted.
Anyone converting a QRP to a ROTH IRA has the same tax options as described above.
The tax option selected is for the year 2010 only and will apply to all conversions. We can not use the 2 year option on one conversion and the 2010 payment on another conversion.
The 2 year option can lead to some problems. What will the tax rates be in 2011 and 2012?
What will your income be in those years?
The recharacterization ability for 2010 conversions will be available until October 15, 2011.