topic Re: Roth IRA Conversion - Need help in Get your taxes done using TurboTax

Roth IRA Conversion - Need help

IrvingUser — Tue, 10 Mar 2026 07:19:00 GMT

Hello

My daughter (20 years, full-time student) has a Traditional IRA account with a balance of 20k now. This year she only has an income of $1500. So can she convert T-IRA balance of $10,000 to Roth IRA without paying any taxes?

I am asking this question as she will have a standard deduction of $12,950 as a single filer for 2022.
$1500 (income) + $10,000 (conversion) = $11,500 which would be still lower than the individual standard deduction for 2022.

Please let me know if the IRA conversion amount from 1099-R/5498 is not considered as a standard income for counting towards a standard deduction.
Thanks

Re: Roth IRA Conversion - Need help

Opus 17 — Mon, 19 Dec 2022 19:10:02 GMT

~~Yes, a $10,000 conversion would be tax free if her total income is less than the standard deduction.~~

[Edited to add: I forgot about the Kiddie tax. See more below.]

A thought: Why does she have that much money in a traditional pre-tax IRA at age 20? You can only contribute compensation from working, and the contribution limit is $6000 per year, so she must have been contributing since age 17 at least. Why was she contributing to a tax-deductible IRA at all, why not contribute to a Roth IRA in the first place? I would not expect her income as a 17 year old to be so high that she would benefit much from a tax-deductible IRA contribution. Assuming she did, for whatever reason, she can do a tax-free conversion if her total income is less than the standard deduction.

Also note, if this is an inherited IRA, the rules may be very different.

Re: Roth IRA Conversion - Need help

dmertz — Mon, 19 Dec 2022 18:58:43 GMT

It seems as though she can be claimed as your dependent. If so, her standard deduction is limited to earned income plus $400. Assuming that the $1,500 of income is earned income and less than half of her support, any amount of the Roth conversion over $400 will be taxable. Furthermore, any amount of the Roth conversion over $2,300 will be subject to kiddie tax at your tax rate.

(As Opus 17 indicated, it's unusual for a 20-year-old to have a traditional IRA balance of $20,000 unless, perhaps, it's the result of a rollover of a 401(k) where she made substantial elective deferrals. If it came from regular IRA contributions over at least 4 years, it seems that she would have made Roth IRA contributions rather than traditional IRA contributions.)

Re: Roth IRA Conversion - Need help

NCperson — Mon, 19 Dec 2022 18:58:38 GMT

@dmertz - maybe it's a inherited IRA????

Re: Roth IRA Conversion - Need help

dmertz — Mon, 19 Dec 2022 19:02:54 GMT

Roth conversions from a traditional IRA inherited by a non-spouse beneficiary are not permitted.

Re: Roth IRA Conversion - Need help

Opus 17 — Mon, 19 Dec 2022 20:30:44 GMT

@dmertz Thank you, I forgot about the Kiddie tax.

@IrvingUser Unearned income by your child is taxed at a higher rate. Even if you don't claim your child as a dependent, they are subject to the kiddie tax until they turn 24 (in most situations). It probably doesn't make financial sense for your child to think about a Roth conversion until they turn 24. However, their ongoing contributions should be made to a Roth IRA, not a traditional IRA..

https://www.irs.gov/taxtopics/tc553

Because of the kiddie tax, and for anyone else reading this in the future, it is highly recommended that if a child is working and wants to contribute to a retirement account (since their living expenses are covered by their parents), they should contribute to a Roth IRA. They will pay regular income tax on their wages, which will already be zero or less than 10% for most kids with part-time jobs. If the child contributes to a tax-deductible traditional IRA, the tax savings will be minimal and the later tax consequences of doing a Roth conversion or withdrawal will be much more burdensome than the tax deduction.

As noted, if this IRA was inherited, it can't be converted.