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Does anyone have a quick & dirty (or not) website they use to play with their tax returns other than filling out all the personal info for TurboTax etc.? Basically I want to play with the numbers for converting my traditional IRA to my Roth IRA. Thank you.
Personally, I set up a spreadsheet with the rudiments of a 1040. But then you'd sort of expect me to do that
Something relatively easy to do is to take the software you used to prepare your last tax filing and tweak that year's inputs. Just add as income the amount of your contemplated conversion. By comparing that year's taxes with and without the conversion, you'll get a fair sense of how much the conversion will cost you in taxes. Though it won't give you an estimate of how much you'll owe next year.
Be aware of ramifications that go beyond taxes. Increasing income can affect ACA subsidies and IRMAA payments. It can affect state subsidies, e.g. for drug coverage. It likely affects college aid and various tax credits, though I haven't looked into those.
Hi @Mark This is not a direct relate to your particular question; but a further look into Roth conversions. I can not verify the suggested numbers or data.
Hi @Mark This is not a direct relate to your particular question; but a further look into Roth conversions. I can not verify the suggested numbers or data.
I'll use their numbers to reiterate my comment about external impacts.
Aim to “fill up” tax brackets with the conversions. For example, a married couple filing jointly falls in the 24% tax bracket with income up to $326,600 this year. A couple with $300,000 of income could safely convert $20,000 of pretax money to Roth and stay in the 24% bracket.
IRMAA goes up about $100/mo when joint MAGI crosses the $320K boundary.
MAGI includes tax-exempt income and cap gains/qualified divs, while the 24% bracket relates primarily to ordinary taxable income after taking deductions. So the two figures aren't talking about the same quantities. Still, for the sake of argument, assume that somewhere along the line in going from $300K ordinary taxable income to $320K ordinary taxable income, this couple crosses the IRMAA threshold.
Adding $100/mo/individual could increase their Medicare premiums by $2400 (2 x 12 x $100). That's an extra cost $2400/$20000 = 12%, bringing their effective tax rate to 36%.
@msf - yes I would expect that you would have your own spreadsheet. I am slapping my forehead for not having thought of playing with last years return. Good one.
Comments
Something relatively easy to do is to take the software you used to prepare your last tax filing and tweak that year's inputs. Just add as income the amount of your contemplated conversion. By comparing that year's taxes with and without the conversion, you'll get a fair sense of how much the conversion will cost you in taxes. Though it won't give you an estimate of how much you'll owe next year.
Be aware of ramifications that go beyond taxes. Increasing income can affect ACA subsidies and IRMAA payments. It can affect state subsidies, e.g. for drug coverage. It likely affects college aid and various tax credits, though I haven't looked into those.
https://dinkytown.net/java/1040-tax-calculator.html
This is not a direct relate to your particular question; but a further look into Roth conversions.
I can not verify the suggested numbers or data.
HERE
Take care,
Catch
MAGI includes tax-exempt income and cap gains/qualified divs, while the 24% bracket relates primarily to ordinary taxable income after taking deductions. So the two figures aren't talking about the same quantities. Still, for the sake of argument, assume that somewhere along the line in going from $300K ordinary taxable income to $320K ordinary taxable income, this couple crosses the IRMAA threshold.
Adding $100/mo/individual could increase their Medicare premiums by $2400 (2 x 12 x $100). That's an extra cost $2400/$20000 = 12%, bringing their effective tax rate to 36%.
@msf - yes I would expect that you would have your own spreadsheet. I am slapping my forehead for not having thought of playing with last years return. Good one.