Tax Filing Options For IRA Conversions
Taxpayers who converted a traditional IRA to a Roth IRA in 2010 have two options for reporting the related income on their tax returns:
- Pay the tax on your 2010 Tax Return
If you are concerned that your current tax rate will increase in 2011 and 2012 due to an increase in income or the expiration of tax cuts, you can report all the income on your 2010 tax return. - Pay the tax on your 2011 and 2012 Tax Returns
If you want more time to pay the taxes on the income, you can report 50% of the income on your 2011 tax return and the remaining 50% on your 2012 tax return.
You may also decide that converting your traditional IRA to a Roth IRA in 2010 was not the right decision. If so, you can recharacterize your Roth conversion back into a traditional IRA.
By either filing your return or requesting an extension by April 18, 2011, you can delay your decision until October 17, 2011.
At Anstiss & Co., we have been assisting our clients with critical tax-related decisions for over 45 years. Call one of our experienced professionals today at 978-452-2500 so that we can help you decide which option of reporting your Roth conversion is best for you, and assist you with any other tax questions you may have.
Anstiss & Co. is a Lowell- based public accounting firm serving clients throughout the United States. The firm was founded by Ray Anstiss, Sr. in 1964, and is currently listed as a Top-35 Accounting Firm in Massachusetts by the Boston Business Journal.
