Looking for some clarification. My 2025 MAGI will be over $260k once I complete a $40k Roth conversion this month (Dec 2025). If I withhold 24% of the conversion, only $30,400 rolls into my Roth and the remaining $9600 pays the federal taxes. Some questions:
1) I'm assuming since I do a withholding, there's no underpayment penalty? Am I correct?
2) Can I then use my separate savings account to put $9600 into the Roth (60-day rollover) and not incur any penalty? This way, I get the full $40k into the Roth.
3) Is that $9600 capped because my MAGI is large this year? In other words, is the $9600 considered a Roth contribution, rollover, or what is it actually? I think it's a rollover because I'm assuming the 60-day rollover allows this, but this is where I get confused.
4) How will TT treat the $9600 rollover? There's no document because I'll be using my bank account.
I do realize this rollover strategy is only allowed once in 12 months. I didn't do this last year so I think I'm good there.
Many thanks to all!!
