Hello knowledgeable forum members. As my DW (43) has been a SAHM & out of workforce, I (45) would like to take advantage of being in the 12% federal tax bracket by converting traditional IRA to ROTH. My question is how much can I convert and still stay in the 12% bracket.
As an example, 100k salary with $22k towards 401k & $8k towards HSA. That would bring taxable earnings to $70k. Standard deduction of $27.7k for MFJ, which then brings taxable income to 42.3k. With the tax bracket in 2023 at $89,450 for MFJ, it seems that would mean one could convert $47,150 and still have everything converted in the 12% tax bracket. I know that if we went over in ROTH conversions the 22% would only be applied to the amount over $89,450.
Am I missing anything? Health & dental insurance premiums also subtracted from the $42.3k amount?
Reasons for wanting to do this include likely possibility of being in higher tax bracket in the future. Have been getting a decent tax refund with 2 dependents, but willing to let that go to maximize this.
As an example, 100k salary with $22k towards 401k & $8k towards HSA. That would bring taxable earnings to $70k. Standard deduction of $27.7k for MFJ, which then brings taxable income to 42.3k. With the tax bracket in 2023 at $89,450 for MFJ, it seems that would mean one could convert $47,150 and still have everything converted in the 12% tax bracket. I know that if we went over in ROTH conversions the 22% would only be applied to the amount over $89,450.
Am I missing anything? Health & dental insurance premiums also subtracted from the $42.3k amount?
Reasons for wanting to do this include likely possibility of being in higher tax bracket in the future. Have been getting a decent tax refund with 2 dependents, but willing to let that go to maximize this.
Statistics: Posted by Livelife2fullest — Fri Feb 02, 2024 7:12 pm — Replies 5 — Views 455