"Aaron Mallin" <amallin[at]gmail.com> wrote:

- quote -

Sounds like it might work - have not checked it out BBUUTT
(that's a big but) how do you convert the IRA to a ROTH
after the fact???????? 99.9999999% of these people ARE NOT
you year end tax planning clients.

Regards,

Mark

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Aaron Mallin wrote:

- quote -

You had me thinking there for a second. I pay AMT. So I went
to this year's return, and added $10,000 as if it were an
IRA conversion. My tax went up my marginal rate plus 2%. AMT
went up, not down, and other stuff phased out to create a
higher-than-marginal-rate increase. Nasty stuff.

I know enough to tell you "that's not how it works", but
would need an afternoon and two beers to figure out exactly
why.

JOE

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"Aaron Mallin" <amallin[at]gmail.com> wrote:

- quote -

I do work with clients trying to minimize the AMT problem.
Note, I didn't say I could eliminate it. In most cases, the
best that can be hoped for is to be able to reduce it. The
complexities of the AMT make each situation different for
each situation.

No such thing as a quick fix (other than the politicians
repealing it)

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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Aaron Mallin wrote:

- quote -

It doesn't work. Roth conversions aren't AMT adjustments.

Single person, no dependents, $100,000 of AGI, $30,000 of
AMT adjustments is $1,711 of AMT. It's hard to get $30,000
of AMT adjustments on $100,000 of income, and if you've got
more income, you're ineligible for a Roth conversion.

In any case, said person has $14,950 of tax, including the
$1,711 of AMT. If you then do a $1,000 Roth IRA, you have
$15,210 of tax, including $1,721 of AMT. So you've just
made the AMT worse.

Phoebe

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"Aaron Mallin" <amallin[at]gmail.com> writes:

- quote -

If they meet the income limit (which is $100K of *combined*
AGI), they are very unlikely to be in the AMT in the first
place.

- quote -

How is that going to work? The conversion will be taxed
under both the AMT and the regular tax, so they won't save a
dime.

A *very* important thing to remember is that reducing the
AMT line on your Form 1040 to zero does *NOT* mean you have
saved anything.

The AMT line is simply the difference between your tax
computed under the AMT system (the Tentative Minimum Tax or
TMT) and your tax computed under the regular tax system
(which I'll call RT).

In other words:
AMT = TMT - RT (but never less than zero)

There are lots of ways to make AMT smaller (or zero):
* Leave TMT alone and increase RT -- but this won't
save you any tax at all, and if RT gets bigger
than TMT, you're actually paying more tax that you
would have without your avoidance strategy.

* Have them both increase, but have RT increase faster.
Again, you'll end up paying even more tax than if you
tried to avoid the AMT.

* Have TMT drop but RT stay the same -- this time you
will save money via your avoidance strategy.

* Have them both drop but have TMT drop faster -- again,
you'll save money.

Heck, you could even save money even though AMT got bigger.
If you did something that decreased both TMT and RT but
decreased RT faster, your AMT line on Form 1040 will get
bigger, but you'll be paying less in total taxes.

In any event, doing a Roth conversion is very likely to
result in the case where both TMT and RT increase, but RT
increases faster. In other words, you're paying more taxes
than if you didn't do it.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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"Aaron Mallin" <amallin[at]gmail.com> wrote:

- quote -

Most, though not all, taxpayers hit with AMT have an AGI
greater than 100K so they aren't eligible to convert a
traditional IRA to a Roth IRA.

Ira Smilovitz

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Will all the talk about the middle class is increasingly
getting hit with the AMT, I am surprised that I haven't come
across any articles offering one way to avoid the AMT. For
those that are hit with the AMT in the middle class (usually
due to high property and state & local taxes, and due to a
large number of children), can't these people simply convert
a traditional ira to a roth ira (assuming they meet the
income guidelines). They can figure out how much to convert
that would let them pay the same tax that they would be
paying with the AMT but this way they would now have a Roth
which can be taken out tax free in retirement. Did I miss
anything with this technique? Anyone ever use this for their
clients?

Thank you.

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