Heres my tax situation in 2020. Total estimated earned income is $3000 between me & non-working wife. Have two kids under 16. Is following scenario possible? Could you help if I missed anything ?My Plan:$3000 - Earned income$29,250 - Rollover from husband Trad IRA to Roth IRA$29,250 - Rollover from wife Trad IRA to Roth IRA-------------------------------------------------$61,500 = Total incomeMy Taxes:Total Income$61,500Total Deductions$24,800Total Exemptions$0Taxable Income$36,700Regular Taxes$4,009Child Tax Credits$4,000Total Tax with Credits$9Marginal Tax Rate12%Tax Amount Owe$9 I also read that lower-income taxpayers may be eligible for the "saver's credit" if they contribute to an IRA.Is tis possible? Could you help if I missed anything ?

amit2020

Question

Is my plan feasible, leveraging low income situation.

Forum|Forum|5 years ago
October 23, 2020
1 reply
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Heres my tax situation in 2020. Total estimated earned income is $3000 between me & non-working wife. Have two kids under 16.

Is following scenario possible? Could you help if I missed anything ?

My Plan:
$3000 - Earned income

$29,250 - Rollover from husband Trad IRA to Roth IRA

$29,250 - Rollover from wife Trad IRA to Roth IRA

-------------------------------------------------

$61,500 = Total income

My Taxes:

Total Income	$61,500
Total Deductions	$24,800
Total Exemptions	$0
Taxable Income	$36,700
Regular Taxes	$4,009
Child Tax Credits	$4,000
Total Tax with Credits	$9
Marginal Tax Rate	12%
Tax Amount Owe	$9

I also read that lower-income taxpayers may be eligible for the "saver's credit" if they contribute to an IRA.

Is tis possible? Could you help if I missed anything ?

macuser_22

Employee

Sounds about right, but how can you support a family of 4 on $3,000 of income? and if that is taxable compensation eligible to make a IRA contribution, then that could result in about $200 savers credit and leave you with no income at all to live on?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

X

xmasbaby0

Employee

Also---you are assuming you get $4000 child tax credit. With only $3000 of income from working you will not get that. The refundable portion of the child tax credit is based on how much you earned. You get the refundable "additional child tax credit" on amounts over $2500 of earned income. So you would be able to get 15% of about $500 in additional child tax credit (about $75) IF your children have Social Security numbers. If the kids do not have SSN's you do not get the child tax credit.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

macuser_22

Employee

The Child Tax Credit of $4,000 is based on the 1040 line 12b (tax liability), not earned income. If the savers credit was taken then that could reduce the $4,000 somewhat (schedule 3 line 4 is subtracted form 12b) which could make the tax liability less then $4,000 which would limit the amount of CTC, but would then qualify for a small amount of ACTC in addition to the CTC.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**