ripvanwinkle
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Joined: Jan 9, 2011 22:36:42 GMT -5
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Post by ripvanwinkle on Feb 2, 2023 23:47:39 GMT -5
Doing my taxes. If I put $7000 cash in my traditional IRA for a deduction, file my taxes then transfer it to my Roth IRA, what is my tax liability/penalty? 10%??
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minnesotapaintlady
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Post by minnesotapaintlady on Feb 3, 2023 8:45:44 GMT -5
There is no tax penalty on conversions. You pay ordinary income taxes on the full amount converted, so whatever your marginal rate is.
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ripvanwinkle
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Joined: Jan 9, 2011 22:36:42 GMT -5
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Post by ripvanwinkle on Feb 3, 2023 22:06:18 GMT -5
I found out I should have said 'Recharacterize" my $7000 contribution from my traditional IRA to my Roth IRA.
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minnesotapaintlady
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Post by minnesotapaintlady on Feb 3, 2023 23:12:07 GMT -5
The re-characterization has to be done before the tax deadline and if you've already filed, then you'll have to file an amended return to show the IRA as Roth instead of Traditional. Still no penalty, beyond losing the deduction.
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