Tag Archives: IRA

How to Calculate Taxes on IRA Income

calculating taxes on IRAs

Calculations vary with contributions and earnings In last month’s article, I wrote about the mistaken idea some people have that they earn too much to benefit from a Roth IRA.  The Tax Increase Prevention and Reconciliation Act, passed by Congress in 2005, effectively opened up a legal avenue to make contributions to a traditional IRA, and then convert all or part of the funds to a Roth. Let’s dig a…

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Don’t Think You Earn Too Much For A Roth IRA 

When Roth IRAs were created in 1997, they were an exciting new idea. They provided a way to make after-tax contributions that could, under certain conditions, grow entirely free of federal income taxes. Prior to that, traditional IRAs worked basically the other way around — you could make deductible contributions, but distributions would be fully taxable. The law also allowed taxpayers to “convert” traditional IRAs to Roth IRAs by paying…

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