Do I have to pay the taxes on a ROTH conversion as soon as I make the conversion?
I plan on doing a conversion that year of approximately $80,000.
If I did not do the conversion I would have expected to be getting a tax refund this year. That is because I would have broken even. Instead I will have a $7300 federal tax credit for installing solar panels.
I'm planning to convert enough to take me to the top of the 24% bracket. That will be a taxable income of $182,100. The conversion amount will be approximately $80,000. I plan on converting $40,000 now (in September) and the rest closer to December 31st.
The tax on $40,000 @ 24% is $9600. But with the $7300 credit I would only owe around $2300. Should I pay that now as an Estimated payment? What would happen If I did not pay that amount now and waited until I filed my taxes to pay the full balance?
