Guest jimh Posted February 23, 2002 Posted February 23, 2002 We converted our IRAs to Roth IRAs in 1998 and this year are having to declare the 4th of the 4-year distributions required by the law on our taxes. Unexpectedly, our income was higher last year because of second jobs that both my wife and I took on to make ends meet. When I computed our taxes, I found that with the Roth conversion our adjusted gross income had gone over the limits that allow us to take the full $1200 deduction for each of our four kids. Suddenly, instead of owing nothing, as I expected and budgeted, I have a $3000 tax bill (including state income taxes, as well)! Am I just out of luck or did I miss something? Must my declaration of Roth IRA income - that I won't see for another 15 years - create this tax liability? Any similar experiences or advice? Thanks
John G Posted February 25, 2002 Posted February 25, 2002 Looks like you just entered the "phase out" zone for deductions and exemptions. If your math is correct, you are stuck. Be happy that you got the 4 year average, which is no longer available. The first time you see those odd exemption and deduction values it is often a shock. You just joined a small club of successful families. The pain will go away next year. You may want to have a tax professional review your math.
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