Traditional IRA to Roth Conversion

Forum|Forum|2 years ago
December 21, 2023
2 replies
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My situation seems simple but Turbotax doesn't seem to walk me through it in a way that makes sense to me.

I am retired, have no W2 income and want to look at the tax implications/Brackets to determine what I can convert from traditional to Roth but from what I've been able to research this effort is commingled with contributions.

I receive $32k in SSA, and budgeted an ordinary distribution from my Traditional Ira of $33k but when I increase the $33k to $53k TurboTax increased my tax liability by about $7,300 which doesn’t make sense. Especially since I’m looking at the SSA tax Calculation, spreadsheet, and formulas that they provide showing that I am still in the 12% tax bracket?

Is there a straightforward road map that I can follow to achieve a conversion and look at the tax consequences?

I very much look forward to your insight

Thanks

Best answer by dmertz

The increase shown by TurboTax is almost certainly accurate. You are likely experiencing side effects of the increase in your AGI. A major one is the multiplying effect on your tax-bracket rate due to more of your Social Security income becoming taxable. It's also possible that there is a reduction in some kind of tax credit. To discover the exact cause you'll need to compare your entire Form 1040 with and without the additional $20k of income.