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I want to increase my taxable income for 2023 by converting my regular IRA to Roth IRA. Should I convert the cash part or the stock part of my regular IRA?

Forum|Forum|3 years ago
March 23, 2023
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I want to maximize my income so that I'll get full $7500 tax credit for buying an electric vehicle.

TurboTax Deluxe Online

Best answer by MinhT1

Converting a Traditional IRA to a Roth IRA is a taxable event. It will increase your taxable income and your tax liability, and will enable you to use up the EV credit.

Converting the cash part or selling stocks to convert is really up to you as it has the same tax effect. It depends whether you wish to sell the stocks held within your Traditional IRA. The gain/loss from selling the stocks in the IRA is nor reportable on your tax return.

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MinhT1Answer

Converting a Traditional IRA to a Roth IRA is a taxable event. It will increase your taxable income and your tax liability, and will enable you to use up the EV credit.

Converting the cash part or selling stocks to convert is really up to you as it has the same tax effect. It depends whether you wish to sell the stocks held within your Traditional IRA. The gain/loss from selling the stocks in the IRA is nor reportable on your tax return.

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callmeyanAuthor

Thank you for answering my question. A follow-up question: How do I determine how much IRA to convert so that the tax I will owe will be more the $7500? Does TurboTax have tools to help me estimate the amount? Or do I have to wait until TurboTax 2023 is available, go through the filing process, adjust the conversion amount in the software, and then find out how much I really need to convert?

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MAK70

Because the amount is dependent on your total income, you could estimate the amount to convert by entering it as a "fake 1099-R' in TurboTax 2022 but you probably need to wait until the 2023 version is out to get an accurate final amount (it is also based on any changes that may happen). @callmeyan