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Author: wobur Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120781  
Subject: Conversion to Roth and EIC Date: 4/9/1999 2:31 PM
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I did a Roth conversion before the end of '98, and otherwise qualify for EIC. Form #8606 seems to indicate that I do need to take into account 25% of the conversion for EIC qualification, but an e-mail response from the IRS web site states otherwise. Which is correct? Also, do I need to pay taxes on 25% of the total conversion for '98, or the entire amount, even though only 25% would be calculated for AGI?
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14419 of 120781
Subject: Re: Conversion to Roth and EIC Date: 4/11/1999 11:24 PM
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[[I did a Roth conversion before the end of '98, and otherwise qualify for EIC.]]

But you may not NOW because of the additional conversion income.

[[ Form #8606 seems to indicate that I do need to take into account 25% of the
conversion for EIC qualification, but an e-mail response from the IRS web site
states otherwise.]]

I don't know what to tell you about the IRS stupid line. All I CAN tell you is that your Roth IRA conversion income impacts ANYTHING that has to do with your AGI. Anything...including your EIC. The instructions in your IRS Form 1040 makes that perfectly clear.

[[ Which is correct? Also, do I need to pay taxes on 25% of the
total conversion for '98, or the entire amount, even though only 25% would be
calculated for AGI?]]

You spread the INCOME...not the tax. This is distinction with a big difference. Check out my post on the Roth IRA in the Taxes FAQ area for more infomration on the Roth IRA and how this actually works.

TMF Taxes
Roy

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