IRA Conversion to Roth IRA: Pay now or split 2011-2012
I have completed by 2010 returns under 2 scenarios:(1) including the taxable income in 2010 as a result of my conversion of my nondeductible and deductible IRAs to a Roth, and (2) deferring the income equally in 2011 and 2012. Deferring the taxable amount of the conversion gives me a sizeable refund, but also AMT of $10,879. Including the taxable amount in 2010’s income means I will have to pay some additional tax with my return, but the AMT component of my 2010 tax will be $9,230. Which option economically is better?
Permalink Submitted by Alan Spross on Fri, 2011-02-25 23:19
You might have different AMT preference items in 2011 and 2012 than this year. Since the 2011 and 2012 changes will likely be limited to small inflation adjustments, you might try to use your current software to estimate your 2011 and 2012 taxes with and without the two year deferral. Then compare the 3 year total with the deferral and without it.