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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76396  
Subject: Re: IRA to Roth IRA Conversion Date: 7/29/2013 11:01 AM
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Peter, I don't mind a pro pulling rank & telling me I'm all wet. That challenges me to dig in and figure it out from the ground up.

So I went to 2012 TurboTax and plugged in various scenarios. Imagine my shock to discover that [some] stuff I'd been reading on the internet was wrong!

It's not as bad as I thought, and it's not as good as I understood Peter to say.

After playing with Turbotax and carefully reading the IRS forms, the truth appears to be this:
1) Compute your taxable income without dividends[*].
2) The amount of dividends[*] that are taxed at 0% is that amount which brings your taxable income to the top of the 15% bracket. (70,700 in 2012, 72,500 in 2013, for MFJ)
3) All dividends above that are taxed at 15%.
2a) If your taxable income without dividends is already more than 70,700, then all the dividends are taxed at 15%.

[*] Strictly: long-term capgains plus qualified dividends.
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