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@BlueRump - agree it is not taxed @3.8%, but it can 'push' your unearned income to be taxed @3.8%
Assume filing single with total income of $160,000 including unearned income of $10,000. There is no NIIT
But then I do an IRA conversion to my Roth (or a distribution - it doesn't matter) for $50,000
Now my total income is $210,000 and the $10,000 of unearned income is taxed @ 3.8%,
My earlier point is when determining the tax impact of taking a conversion, it may have a "knock on" effect to other taxes that some fail to consider.
A Roth conversion is not wages or income from self-employment, so it has no effect on the additional Medicare tax calculated on Form 8959.
@jerry-kim but it can be subject to the 3.8% NIIT tax, depending on your income after the conversion. (Line 11 of Form 1040 is the trigger for most)
Thanks. I thought IRA withdrawals doesn't qualify for NIIT since Roth IRA conversion is viewed as a IRA withdrawal.
@BlueRump - agree it is not taxed @3.8%, but it can 'push' your unearned income to be taxed @3.8%
Assume filing single with total income of $160,000 including unearned income of $10,000. There is no NIIT
But then I do an IRA conversion to my Roth (or a distribution - it doesn't matter) for $50,000
Now my total income is $210,000 and the $10,000 of unearned income is taxed @ 3.8%,
My earlier point is when determining the tax impact of taking a conversion, it may have a "knock on" effect to other taxes that some fail to consider.
You're right. IRA withdrawals will add to youre overall income which can effect how your NIIT is determined.
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