Our eldest son (generally listed as dependent) has earnings this year that are already getting close to (I believe) the threshold for paying/filing taxes, $14,600. For the sake of this example, say he ends up with W2 reported income of $16,000.
Typically, we would make a Roth IRA contribution, to the extent that the year's earnings allow. If instead, we were to make a traditional IRA contribution (say $7000), and convert to Roth the next day? Do I understand correctly that this would lower his taxable income (by $7000) such that it would take him below the threshold for paying a tax? Does the trad contribution or Roth conversion (or both) mean that he does have to file a return (to document those steps), even if paying no tax?
Sorry, these may be very basic questions, I realize. It's just our first time getting into this. Thanks.
Typically, we would make a Roth IRA contribution, to the extent that the year's earnings allow. If instead, we were to make a traditional IRA contribution (say $7000), and convert to Roth the next day? Do I understand correctly that this would lower his taxable income (by $7000) such that it would take him below the threshold for paying a tax? Does the trad contribution or Roth conversion (or both) mean that he does have to file a return (to document those steps), even if paying no tax?
Sorry, these may be very basic questions, I realize. It's just our first time getting into this. Thanks.
Statistics: Posted by Tramper Al — Sat Sep 07, 2024 8:02 am — Replies 6 — Views 272