Today is 11/28/24. I am retired, and I want to do a Traditional-to-Roth conversion between now and 12/30/24. As I understand it, if the Roth conversion is to be reported in my 2024 income tax return, I have to do the conversion by NLT 12/30/24. This will be the first time I do a Roth conversion, and I plan to repeat this process until most or all of my Trad IRA is converted to Roth.
For now, I want to convert to Roth as much as I can without crossing over to the 24% tax bracket.
...If the deadline for Roth conversions for Year 2024 were to be April 15 2025, I would simply do my 2024 income tax return after the software is complete, and I would experiment with the Trad IRA amount to convert until I max out the 24% bracket. After I'd know the max amount, I'd then do the actual Roth conversion, and I would not be posting this question. BUT, since the Roth conversion has to be done before 2024 Turbo Tax is complete, here are my questions:
1. Seeing how Turbo Tax for 2024 will not be available (complete) until after Jan 2025, how can I figure out what amount to convert? I have an idea of the amount, but that's all it is. I want to be more precise with the amount to convert vs proceeding with just an idea, because I want to maximize my conversion amount by reaching the limit of the 24%, but not cross into the 32% bracket. Jumping Medicare premium tier is not a concern.
2. I usually use the Turbo Tax Premier for reporting rental income. Can I report Roth conversions using Premier or do I need to get a different version.
Thanks in advance.
My sources of income do not change significantly from year to year. Of course, the values do, so I keep track of 2024 vs 2023 to see how my AGI is likely to change. The mutual funds that make capital gains distributions in December are the biggest uncertainty. I do not try to be perfectionist about filling the 24% bracket. A little undershoot or overshoot is not terribly significant.
In my case, employer pension is fixed, except for the ocassional minor inflation adjustments. What makes my 2024 income different from 2023's is rental income/expenses due to a vacancy + above average repairs with legal expenses.
Because I'd like to Roth-convert portions of my Traditional Rollover IRA over the next 10+ years, the moving target (rental income/expenses) will make it difficult for me estimating how much I should convert each year. For 2024, for example, the Standard Deduction changed from 2023's, the tax tables are not the same as 2023's, etc. In summary, rental income/expenses make my income tax returns different every year. This is why I think I need to know what my tax return will look like w/o a Roth conversion, so I can then (by iteration) decide what amount to Roth-convert.
I am currently doing a mock-up income tax return using Turbo Tax for 2023 and entering my values for 2024, and I am not sure this is even a good use of my time.....
If the IRS allows a working citizen to make pre-tax IRA contributions for 2023 as late as 4/15/25, why couldn't we also do Roth conversions for 2024 as late as 4/15/24? I understand, this is not allowed, so why can't the tax software be ready for use before at the very least a week before the tax year ends?
Sorry, I meant to write: "...why couldn't we also do Roth conversions for 2024 as late as 4/15/25?"
"I do not try to be perfectionist about filling the 24% bracket."
If your estimate is ball-park but too high, only the overage is taxed above 24%.