Tax planning questions for my situation

[oochillies]

First of all, I’m so grateful that this event is being held. I have a bunch of questions concerning my situation so would appreciate some help confirming that I’m thinking about my tax planning correctly.

Question 1: Is this the correct way to calculate my estimated taxes this year? 

1. **Salary and Bonus**: I have a salary of $54,000 and a bonus of $4,500, which totals to $58,500.
2. **401k Contribution**: The maximum contribution to a traditional 401k in 2024 is $23,000. Maxing out my contribution, my taxable income becomes $58,500 - $23,000 = $35,500
3. **Standard Deduction**: The standard deduction for a single filer in 2024 is $14,600. Subtracting this from my taxable income, we get $35,500 - $14,600 = $20,900.
4. **Tax Brackets**: In 2024, for a single filer, the federal income tax rates are:

    - 10% for income from $0 to $11,600

    - 12% for income from $11,600 to $47,150

Given my adjusted taxable income of $20,900, I fall into the first two tax brackets. So, my tax owed would be calculated as follows:

- 10% of the first $11,600 = $1,160

- 12% of the remaining amount ($20,900 - $11,600 = $9,300) = $1,116

So, my total tax owed would be $1,160 + $1,116 = $2,276 (3.89% effective tax rate). Is this correct? 

Question 2: If I were to contribute $30,000 to an after-tax 401(k) and then convert it to a Roth IRA using the Mega Backdoor Roth strategy, would this process be tax-free? And would it essentially be the same as if I had directly contributed $30,000 to my Roth IRA?

Question 3a: Based on question 2, would it be more tax-efficient to sell stocks to cover my living expenses, thereby allowing me to contribute more to a Mega Backdoor Roth IRA? I would sell stocks worth $40,000, with $10,000 being long-term capital gains. 

Question 3b: Given my current tax bracket, would I be correct in understanding that I wouldn’t owe any federal tax on $10,000 of long-term capital gains?

Question 4: when it comes to the sale of stock and my situation, is this something that Turbotax premium would be able to automate with ease without needing to seek further tax help from a CPA?

[RobertB4444]

1. Your calculations are correct

2. Mega-Backdoor Roths are complicated.  While you are correct that moving after-tax money into a Roth incurs no tax implication there are still a number of issues that can get in the way.  I recommend consulting a financial advisor.

3a. Selling stocks to manage your living expenses is more efficient at a much lower tax rate.  

3b. At the tax rate you have listed in question 1 you are correct. 

4. A lot of things are automated in TurboTax but whether it is 'with ease' or not is a matter of opinion.  You have a complex tax situation and should expect your taxes to be complicated as well.  Here are the instructions for entering a backdoor Roth in TurboTax.  It's not a two foot putt.

@oochillies