First installment of taxes owed on 2010 Roth conversions

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First installment of taxes owed on 2010 Roth conversions

Friday, January 20, 2012 at 4:17PM

Individuals who did a Roth conversion in 2010 and elected to spread the tax payment over 2011 and 2012 will have to pay one-half of the tax owed on their 2011 income tax return. However, if a taxpayer took a distribution in 2011 from their 2010 Roth conversion, they may be required to pay more to cover taxes on the distributed amount. In addition, tax on any additional conversions done in 2011 will have to be included on the 2011 tax return.

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© 2010 Davis & Hodgdon Associates The Blog is published by Davis & Hodgdon Associates CPAs. Recipients should not act on the issues presented without seeking prior professional advice. Additional guidance regarding information contained herein may be obtained by contacting Davis & Hodgdon Associates CPAs at (802)878-1963.

Internal Revenue Service Circular 230 Disclosure. Pursuant to Internal Revenue Service Circular 230, we hereby inform you that the advice set forth herein with respect to U.S. federal tax issues was not intended or written by Davis & Hodgdon Associates CPAs to be used, and cannot be used, by you or any tax payer, for the purpose of (i) avoiding any penalties that may be imposed on you or any other person under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.