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As John Yeigh points out in his article this morning, https://humbledollar.com/2024/07/driven-by-taxes/ taxes dive a lot (too much?) of our behavior.
What do people do for mid-year tax planning? I’m currently doing a version of the |”spend from taxable to keep income low to qualify for ACA credits but fretting about whether I should be doing Roth conversions and/or geting out of positions in highly appreciated individual stocks that comprise too much of my portfolio” dance. I’ve got a spreadsheet going, and probably going to start punching numbers into last years TurboTax.
Thoughts?
We have some withholding taken out of our SS and pension. I am doing a Roth conversion towards the end of each year, but I make sure it doesn’t trigger an IRMAA adjustment for both of us. (I mail in the estimated tax on the Roth conversion by Jan 15th to avoid an underpayment penalty.)
Turbo Tax has a ‘What-If Worksheet’ which makes estimating your taxes a little easier. Here’s an article on how to use it:
https://thefinancebuff.com/turbotax-what-if-planning-roth-conversion.html
Note: On my Turbo Tax version, I have to navigate to VIEW->FORMS and then OPEN FORMS. Then type in ‘What-If’ to display the ‘What-If Worksheet’.
And you must include the “-” in the What-If. Just typing “What” doesn’t seem to work.
Just typing “wha” worked for me.
Cheryl – thanks. I have the same issue with y version of TT.
I anticipate total income for the year and start to think about what room there is to do Roth conversion or realize some capital gains. But, I wait until December before taking serious action that cuts it close to my desired income ceiling, as it’s next to impossible to get right at mid-year. If the market were to take a serious drop earlier then I might do some Roth conversion earlier, but would leave some buffer.