Quote:
Originally Posted by JSH
That isn’t how Roth conversions work. If you are in a 20% tax bracket you would need to convert $25,000 from a traditional IRA to a Roth IRA to pay an additional $5000 in federal taxes and max out the EV tax credit.
If you contributed $5000 to a Roth IRA instead of a Traditional you would only pay $1000 extra in taxes
If you take $5000 cash at put it in a Roth IRA there would be no effect on your taxes
*only examples, most households aren’t in that high of a federal tax bracket so you need to do the math based on your situation.
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IF I was allowed to convert my traditional to a Roth (which I cannot in the federal system) I would probably do even more than $25,000. I see what you mean about not paying more taxes by adding other money to a Roth IRA. Maybe next year I'll switch the contributions over from standard to Roth as doing it this late this year wouldn't amount to much.
Doesn't the way this tax credit works just piss you off? If anything a blue collar middle class working family buying a fuel efficient minivan for everyday personal use should be the very group and type of vehicle a tax incentive is targeted at. Instead millionaires buying their probably 4th car or companies like Google getting 500 million of the money. So glad the money I do pay in taxes gets to help them out.