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- Contribution made to a traditional IRA in 2004 for 2004.
- This contribution is the first contribution and constitutes the entire balance of the IRA.
- While doing 2004 taxes, realize that it would have made more sense to make a Roth contribution last year, so elect not to take the traditional IRA deduction and treat it like a non-deductible IRA contribution instead. (That's what I meant by "counting the income.")
- Convert the traditional IRA to a Roth in 2005, before April 15 (date probably doesn't matter).

So are there any taxes due on the conversion amount or are they just due on the earnings?

There's no tax due period if you do it right. What you want to do is "recharacterize" the contribution and its earnings to Roth. The net effect (zero) on your 2004 taxes is the same, and the earnings that you recharacterize are considered Roth earnings. Your custodian has the necessary forms.

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