“I could have converted $20,000 from my IRA to a Roth IRA and paid NO tax. But I didn’t find out in time.” This happens a lot. It can be avoided with smart planning.
Low income years can be very useful one you have your taxes planned. Not only will you know where your money will go, but you’ll also be more likely to save for the upcoming year.
If you have a year with high deductions, such as the mortgage interest deduction and health-related expenses—and low income that year—you may be able to use it to your advantage by converting some of your IRA to a Roth IRA and pay little-to-no tax.
It doesn’t seem very fun, I know – but the more you learn IRA rules, the more chances you get to benefit from offers and changing taxes.
Many people think you can’t fund IRA’s if you have a retirement plan at work. That may or may not be true, depending on your income. You may eligible to make an IRA contribution and not even know it. Or, perhaps you can make a contribution on behalf of a non-working spouse. Yes, this is possible.
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