This is a topic that’s so important, it even gets its own form. If you want to convert a traditional IRA to a Roth IRA, report the contributions on Form 8606.

An IRA conversion can be incredibly handy for tax savings — if you qualify. One reason why you would convert a traditional IRA to a Roth IRA is that your income level has dropped in the current year. Eligibility for a Roth IRA is based on income.

To qualify for a Roth IRA, your income limit is $135,000 if you’re filing as single, and $189,000 if you’re married filing jointly. If you make more than that, it starts to phase out.

So how exactly do you go about reporting those conversions? The portions that were once deductible from your taxes traditionally are now included as income on the Roth IRA, so you put that on Form 8606 in part 2, line 16 to line 18. On Form 1040, you report that on either line 4A or 4B.


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