Re: Tax bracket change for Roth Conversion
Level 15

Retirement tax questions

1.  I mentioned Medicare Part B and D premiums as an example of something that can be affected by AGI, but in your case it seems that it is not a concern.  The IRMAA adjustment for a particular year is determined by the AGI two years before.

 

2.  Because of possible side effects, your concern should be marginal tax rate, not just tax bracket.  If there are no side effects, marginal tax rate will be your tax-bracket rate, but the only way to know for sure that there are no side effects is to prepare simulated tax returns.

 

3.  Yes, to determine the average marginal tax rate for a particular Roth conversion you would prepare the tax return without the Roth conversion, record the tax liability,  add the Roth conversion, subtract the recorded tax liability from the new tax liability and divide by the amount of the Roth conversion added.  The CD/download version of TurboTax has a What-If Worksheet in forms mode that can be used to show these results side by side and it can be set to use the next year's tax rate tables.

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