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Old 06-27-2015, 08:57 AM   #41
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Wow... doing what if opens up my eyes...

I just did another estimate as if I earned an additional $10K... taxes went up (really refund went down) by over $2500...


Did a quick look... and it makes a bit of sense... I have to pay additional taxes of 15%, but my ACA credit goes down by 9%.... plus I lose the little bit I had on savers credit...


SOOO, it seems that converting to ROTH is not a 15% question, but a 24% question... do you want to convert at 24%


Now I have to see what happens if I do a tIRA instead of ROTH... do I get back that 25%....
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Old 06-28-2015, 10:20 AM   #42
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And don't forget the state income tax as well (if applicable). At some point it becomes uneconomic to do a conversion. Whenever I look at this I get a headache.
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Old 06-28-2015, 12:00 PM   #43
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And don't forget the state income tax as well (if applicable). At some point it becomes uneconomic to do a conversion. Whenever I look at this I get a headache.
Lucky for me I do not have state taxes... but yes, for someone who does they have to look at that...


The point I am making is that people keep talking about conversion at 15% when in fact if they qualify for a subsidy the marginal tax rate is higher than that...

When I put in an additional $10K of income, my taxes went up an additional $2,173.... so almost a 22% marginal rate...
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Old 06-28-2015, 12:23 PM   #44
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That's a great reason for adding the ACA subsidies to i-orp; you can't really know the answer to if the bump to the "22% bracket" is worth it unless you model all years, including RMD years.
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