Retirement Tax Planning - Having a Rough Year? Turn Lemons into Lemonade by Using Business Losses to Offset Roth IRA Conversions - Think Outside the Tax Box

Retirement Tax Planning – Having a Rough Year? Turn Lemons into Lemonade by Using Business Losses to Offset Roth IRA Conversions

A ROTH conversion can be a very powerful tool for your retirement. While you don’t receive a tax break for deposits to your ROTH account, qualified withdrawals from the account are tax-free, even earnings. This is an excellent way to avoid tax increases. Let’s say your taxes rise due to increases in tax rates, or because you earn more, which catapults you to a higher tax bracket, ROTH IRA conversions can save you a ton of money in taxes over the long term.

The disadvantage, of course, is that tax is due on the amount you convert based on the value at conversion. But many times, such as when you are in a temporarily low tax bracket, have large deductions during the year, or in a year with business losses, can provide optimal opportunities to convert with little to no tax expense.

Looking for more strategic times to convert? Keep reading to learn more.

Subscribe to Read the rest of the article

Think Outside the Tax Box provides tax reduction strategies along with practical implementation advice in order to reduce your clients’ federal tax bill with ease.

Already have an account? Sign in

  • NOT A MEMBER YET?

    SUBSCRIBE TO GET ALL OF OUR
    GREAT ARTICLES AND RESOURCES!

  • Scroll to Top
    error: Alert: Content is protected !!