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If your income is $100,000 or less and you are single or married, filing jointy, you may be eligible to convert your traditional IRAs to a Roth IRA in order to take advantage of federally tax-free earnings in the future.You will generally pay ordinary federal income tax (but not the 10% penalty tax) on the taxable amount that is converted. Your tax-free potential is maximized if you pay the taxes from your current income or personal savings, not your IRA.Please note that beginning in 2010 the $100,000 adjusted gross income limit for conversions to Roth IRAs is permanently repealed. From 2010 onward, all taxpayers, regardless of income, can convert to Roth IRAs. Also, for conversions occurring in 2010, the taxpayer will only have to report one-half of taxable income in 2011 and one-half in 2012. After 2010, conversions must be reported in full in the taxable year in which they are made.
At Maginnis & Carey, LLP, we’ve been serving the needs of the greater Portland Metropolitan area for over 75 years. If you need help managing your business finances please fill out this form and let us know how we can be of service.
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