Is my plan feasible, leveraging low income situation.

[amit2020]

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@macuser_22 wrote:

This is what your figures get on a mock 2019 return including the savers credit (assuming the $3,000 is wages).

<see original response for image>

Without the savers credit page 2 looks like this:

<see original response for image>

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@macuser_22 Could you help me understand the difference in two scenarios with regards to line 13a?

What was your method to arrive -
1) Could you share worksheet to arrive at 3867 vs 4000 and
2) Could you share form 8812, to see how ACTC of 75 calculated. 

My overall objective here is to be able to rollover max possible T.IRA amount to R.IRA (while staying within 100-200 tax liability). I do not need any refund, I want to use up all my tax credit to rollover max $s.
Line 7 income is 63000 (Earned Income 3000 + Rollover of  60000)

Total Income	$63,000
Total Deductions	$24,800
Total Exemptions	$0
Taxable Income	$38,200
Regular Taxes	$4,189
Alternative Minimum Tax	$0
Net Investment Income Tax	$0
All Tax Credits	$4,000
Total Tax with Credits	$189
Marginal Tax Rate	12%
Tax Pre-payments	$0
Tax Amount Owe	$189

Source - https://www.calculator.net/tax-calculator.html

(Please suggest better calculator that would account for other credits (like saves credit) to play around with numbers?)

1) I want to know if I put $3000 to Roth IRA as a new money contribution, how it would affect my numbers as shown in above table?

2) My actual income as of now is only $1700, I am anticipating $1200 more by Dec 31st.; If I happen to stay at 1700 as earned income, how would it impact in terms of tax credits?

Thank you.

[Critter-3]

First stop calling them   rollovers  ....it is a CONVERSION when you move money from a traditional IRA to a ROTH.  A rollover is not taxable ... a conversion is. 

1) I want to know if I put $3000 to Roth IRA as a new money contribution, how it would affect my numbers as shown in above table?  If you can keep your AGI below $65K then you will get a nonrefundable  saver's credit  of 10% of the contribution which will only zero out your tax liability. 

2) My actual income as of now is only $1700, I am anticipating $1200 more by Dec 31st.; If I happen to stay at 1700 as earned income, how would it impact in terms of tax credits?  Why didn't you just redo the scenario ?

[macuser_22]

"Could you help me understand the difference in two scenarios with regards to line 13a?"

Sure.  But you need to realize that several other forms are involved, the 8880, 8812, and Schedule 3.

In the 2nd example (without the savers credit) your tax liability is $4,067  which is more than the $4,000 CTC so you get the entire $4,000 CTC leaving $67 as tax.

In the 1st example the Tax is still $4,067 but note that line 13a says "add schedule 3 line 7" which is the minus $200 savers credit (from form 8880) so the actual tax is only $3,867 - less that the $4,000 CTC so you cannot get more CTC than the tax liability, so you only get $3,867 CTC and that reduces your tax to zero, but since that is less that the full CTC credit, you then qualify for a small amount of Additional Child Tax Credit (calculated on the 8812 form) which for the 2019 numbers I used results in $75 of ACTC (on 1040 line 18b) that now results in getting a $75 refund.

NOTE:  actual 2020 numbers will probably be somewhat different.