How You Can Maximize Your Itemized Deductions This Tax Season

In this segment of “Financial Planning Q&A” on Motley Fool Live, recorded on Dec. 1, retirement expert Robert Brokamp answers a question about the tax implications when doing a rollover IRA.

10 stocks we like better than Walmart
When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

Stock Advisor returns as of 6/15/21

Robert Brokamp: This question is about rollover IRA conversion to a Roth IRA. “I am retired. Is the entire dollar amount in my rollover IRA pre-tax contribution plus all growth subject to income tax?”

The answer is yes. That’s the cost of doing a conversion. The money adds to your taxable income this year. Obviously, that also means you’ll pay foreign income taxes, but you also have to pay attention to other things that are determined by your income tax rates.

How much your social security is taxed? How much you’ll pay at Medicare premiums? Whether you’ll qualify for certain tax breaks? Many tax credits and other things are determined by your adjustable gross income.

If you’re not sure whether you should do a conversion, it certainly could make sense to talk to an accountant if you work with one just to let you know if you convert $50,000, let’s just say, how much is that going to increase your tax bill and is that also going to then affect other aspects of your finances?

The Motley Fool has a disclosure policy.

Leave a Reply

Your email address will not be published.