How much to Roth
Assuming zero taxable income (line 43 on the 2007 1040) how many dollars can a single person Roth to stay in the 15% , 25% and 28% tax brackets? Thanks.
Assuming zero taxable income (line 43 on the 2007 1040) how many dollars can a single person Roth to stay in the 15% , 25% and 28% tax brackets? Thanks.
Permalink Submitted by Clyde Wolf on Sat, 2008-10-18 17:19
Coatedfabrics,
With line 43 at zero before doing any IRA conversion, and assuming no available tax credits one could convert these amounts from a TIRA to a ROTH IRA and remain in the identified tax bracket:
15% = $33,950
25% = $82,250
28% = $372,950
Permalink Submitted by Alan Spross on Sat, 2008-10-18 19:31
Presuming this is for a 2008 conversion, with -0- taxable income, the tax rate tables for 2008 indicate 32,550, 78,850, and 164,550 for the respective bracket tops.
The difference in the first two may relate to different assumptions based on the wording of the post, but the 28% top appears to come from the wrong table.
Are you asking if the line 43 figure on your 2008 return is -0-, how much could you convert in 2008? The deadline has passed now for recharacterizing a 2007 conversion.
Permalink Submitted by Anovice coatedfabrics on Sat, 2008-10-18 22:01
I think you answered my question, however your last sentence throws me off.
I am not speaking of recharacterizing a Roth, but converting a TIRA to a Roth prior to year end 2008. My question is based on assuming zero income and zero tax credits.
Since income tax needs to be paid on the converted amount, I take your numbers to mean that under my assumptions if up to $32,550 was converted, then 15% tax would be paid. From $32,550 to $ 78,850 the number would be 25% and from $78,850 to $164,550 it would be 28%.
Is this correct?
Permalink Submitted by Alan Spross on Sat, 2008-10-18 23:39
Close, see last paragraph.
I figured you were contemplating a 2008 conversion, but just wanted to make sure.
Although you asked about the 15% bracket first, remember that there is also a 10% bracket in front of the 15% bracket. The first 8,025 of taxable income is taxed at 10%, then the next 24,525 at 15%, etc.
Permalink Submitted by Clyde Wolf on Sat, 2008-10-18 23:43
Alan-oniras,
Thanks for setting it straight.
I started on the 2009 tax rate schedule, not 2008.
Then for the 28% point, jumped a few lines …Bad day.
Just to clarify, for a single filer the points in question for 2008 are:
15% = $32,550
25% = $78,850
28% = $164,550
Thanks again.