IRAs and tax season go hand in hand. Below are a list of the most popular IRA tax-related questions we have been receiving over the last month or so. Make sure you are up to speed on what you can and can't do to get the most out of your tax return, and in turn, your retirement planning.
This week's Slott Report Mailbag includes questions (and our answers) on the Roth IRA conversion limits, Roth recharacterizations and paying tax on a 2010 Roth conversion, and how a spouse should handle an inherited IRA.
You will receive various questions as the tax deadline draws near, and a popular one involving IRAs goes something like: "Can I still recharacterize my 2010 Roth IRA conversion?" Many people will realize that they must begin to pay taxes on this conversion this year, and some will ask if the conversion can be undone, especially if he or she doesn't have the money to pay the tax. The answer and advice you need to give can be found in the below video from our YouTube page, IRAtv.
Today is the last day of February, so there's a good chance that unless you've already done so, you're about ready to go into full tax return mode – gathering your documents, pulling together your receipts and making a list of all those charitable contributions you're going to tell your CPA you made. And while getting your tax return filed on time is important, it's also important to keep one eye on the future, planning ahead so that future tax returns are less painful than they otherwise might be.
Numerous tax changes are in store for individuals in 2012. It's very difficult, however, to write with any degree of certainty about those affecting your income taxes because Congress has shown a tendency to make retroactive changes at any point in time. A number of income tax provisions that affected individual tax payers expired at the end of 2011. See some examples below.
You will have income tax due if you went through with a 2010 Roth conversion, so make sure your tax return includes deferred income. Did you do a Roth conversion in 2010 and take the default option of deferring the income to 2011 and 2012?
IRAs can be tricky, especially when you are a beneficiary trying to convert the funds to tax-free territory. We answer a question on that subject, as well as questions on IRA rollover rules and Roth IRA distributions in this week's Slott Report Mailbag.
IRS released its "Dirty Dozen Tax Scams for 2012" on February 16, 2012. Number one on the list this year - Identity Theft. We detail this problem and how you can protect yourself below.
In another installment of MarketWatch's video series, Andrea Coombes interviews Ed Slott and Jack Nuckolls about the complexities of IRAs and taxes, while asking a question many consumers are asking their financial advisor at this very minute: Is it time for a Roth IRA? This video walks you through the process along with the Roth conversion conversation every consumer should have with their financial advisor. This video is part of a three-video series.
In an interview with MarketWatch's Andrea Coombes, Ed Slott and Jack Nuckolls discuss strategies to reduce your tax bill before 2013. Taxes are going up (tax on investment income, 3.8% healthcare surtax, income tax rates for the highest earners are heading to 39.6%), and Ed provides several strategies you can use to avoid the uncertainty of future tax rates.
