We have just completed our 2006 tax return (married filing jointly) and our AGI is about $50,900. This puts us just out of reach of the retirement savings tax credit, which would give us $200 if we could get our AGI down to $50,000 or below. It would be $400, but one of us was a student last year so it's only $200. We each contributed $4000 to our Roth IRAs in 2006. Here's the question: Can we do some shuffling to claim the credit, and then shuffle back afterwards? This would involve a conversion or recharacterization (not sure which one) of $900 from one of the Roths to a traditional IRA, effective in tax year 2006, deducting $900 from our AGI. More questions: If we can do the above, can we move the $900 back to the Roth (and pay income tax on it, of course) effective in 2007 or 2008? It's important to us that this money end up in a Roth, as we plan to be in a higher tax bracket when we retire than we are now. Will doing this limit our ability to contribute $4000 each (in addition to the $900) to our Roths in 2007 and $5000 each in 2008? Finally, is all this worth the effort for a measly $200?
- posted
17 years ago
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