Roth conversion by a college student
If a 23 year old who graduated college in May and is claimed as dependent by parent’s converts traditional IRA to Roth, is the conversion subject to kiddie tax rules since it is unearned income?
If a 23 year old who graduated college in May and is claimed as dependent by parent’s converts traditional IRA to Roth, is the conversion subject to kiddie tax rules since it is unearned income?
Permalink Submitted by Alan - IRA critic on Tue, 2016-03-08 01:02
Yes. Same for an IRA distribution that is not converted including any inherited IRA RMDs or other distributions. The kiddie tax might make it worthwhile to consider recharacterizing the conversion, especially if the conversion generated a loss.