Since I am moving jobs from Connecticut (CT) to California (CA), my income is temporarily lower in 2024 ($35,000), putting me in the 12% bracket. I have a Trad 401k/Trad IRA that I was thinking of converting to a Roth IRA up to the 12% federal bracket. That means I would convert $26,750 up to the upper limit of the 12% bracket counting the standard deduction ($61,750).
I understand that I will have a federal AGI of $61,750, of which I will pay $5,426 in federal taxes (the highest marginal bracket being 12%). I also understand that I will pay the relevant state income taxes for the $35,000 to the respective jurisdictions. But what happens with state taxes here for rest of the income, the Roth conversion income ($26,750)???
Question 1: Who do I pay the state taxes to for the Roth conversion income--CT or CA? I imagine I will not be double taxed, but if I am, is there some type of tax treaty between the states?
Question 1a: Does the "Other state tax" credit apply here (see CT explanation, https://portal.ct.gov/drs/publications/ ... 92/sn-92-2). It seems like it's about income from working in a different state, not about Roth conversions in a different state.
Question 2: Does where I convert "geographically" matter for how I file taxes? I am moving to California at the beginning of September. If I want to take advantage of CT income tax rates, should I convert to the Roth before I officially move?
Some relevant details:
-I earned/will earn $23,000 in CT and $12,000 in CA in 2024.
-Filing as part-time residents of both CT and CA
-I expect my highest marginal tax bracket to be around 24% upon retirement, which is why I think the Roth conversion up to the 12% bracket is a good call.
-Filing single, and I am under 59 1/2 years of age.
-I don't know if I will be moving to a no income tax state for retirement.
-[Edit: I will pay relevant federal/state taxes from my checking account.]
I understand that I will have a federal AGI of $61,750, of which I will pay $5,426 in federal taxes (the highest marginal bracket being 12%). I also understand that I will pay the relevant state income taxes for the $35,000 to the respective jurisdictions. But what happens with state taxes here for rest of the income, the Roth conversion income ($26,750)???
Question 1: Who do I pay the state taxes to for the Roth conversion income--CT or CA? I imagine I will not be double taxed, but if I am, is there some type of tax treaty between the states?
Question 1a: Does the "Other state tax" credit apply here (see CT explanation, https://portal.ct.gov/drs/publications/ ... 92/sn-92-2). It seems like it's about income from working in a different state, not about Roth conversions in a different state.
Question 2: Does where I convert "geographically" matter for how I file taxes? I am moving to California at the beginning of September. If I want to take advantage of CT income tax rates, should I convert to the Roth before I officially move?
Some relevant details:
-I earned/will earn $23,000 in CT and $12,000 in CA in 2024.
-Filing as part-time residents of both CT and CA
-I expect my highest marginal tax bracket to be around 24% upon retirement, which is why I think the Roth conversion up to the 12% bracket is a good call.
-Filing single, and I am under 59 1/2 years of age.
-I don't know if I will be moving to a no income tax state for retirement.
-[Edit: I will pay relevant federal/state taxes from my checking account.]
Statistics: Posted by OhpBuddy — Sat Aug 17, 2024 5:10 am — Replies 2 — Views 316