Tax Law (Questions About Taxes)/Roth IRA Conversion


Greetings William,
 I am interested in converting my rollover Traditional IRA of $42,000 to a Roth IRA.  What is the best way to reduce my tax burden?  I waited until this year because I am in my last year as a full-time student and I didn't want to jeopardize my scholarship.  I have virtually no income this year and figured it would be best to do the conversion this year.  My question is, what are the Tax consequences given I have no income?  Should I transfer the full amount of 42K or would it be less costly to transfer 1/2 this year and then 1/2 next year?  I guess, I would like to know what are my taxes for each option?

Thanks for the help!

generally, you could convert close to or at tax free if you have no income -- but for the fact that you have 42k, which will cause you to be taxed on that full amount (depending upon deductions and credits - including possible college credits) you could convert at less than 15%.

but this is a MUCH more complicated set of discussions that are not best served by a free discussion board - i suggest you find a local cpa and or investment advisor to model your answers.  It might be advantageous to do half and half.

it might have been better to do some in 2013 too. when you say this is my last year, i presume you are graduating in may 2015?  

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Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).


19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

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