Background: In December 2020, I left my job at my US-based employer as part of the process of being hired by one of its international entities. In January 2021 I moved outside of the United States and fully expect to be able to meet the physical presence test to qualify for the Foreign Earned Income Exclusion and currently make less than the threshold. The job move/transfer qualified me for a sizable bonus ($25,000 pre-tax) from the US-employer and was paid to me in February with normal US federal and state taxes withheld at higher-than-normal rates (there was a 31% withholding at the federal level).
Question: Given my qualification for the FEIE and with the bonus being my only US income, I expect to receive a pretty generous refund after taking the standard deduction when I file 2021 tax returns, so can I convert money in a traditional IRA into a Roth IRA until my refund is near $0? If it matters, all of the money in the traditional IRA is pre-tax account from rollovers/was deductible when contributed. Happy to provide additional context/information if needed for a more precise/accurate answer. Thank you!
