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Subject:  Re: Stoopid Ohio state tax law Date:  4/11/2002  9:01 AM
Author:  ladyvonkulp Number:  60181 of 131270

[I think something's gotten garbled here. If you file your Federal return Married, Filing Separately, you cannot make a Roth IRA contribution if your AGI is above $10,000. I suspect that the MFS filing status would save you on your combined Federal and state tax, but at the cost of making the Roth contribution.]

Yep, you're right. DH took the first phone call, and he's not as money-minded as I am, so he may have not understood the whole deal. I called my parents last night, who have Block prepare their taxes, and it turns out they both have Roths and file separately anyway. That sounded odd, since my parents are the last people in the world to cheat on their taxes. I called the preparer back, and got the real story (i.e., that it's a fed law, not an Ohio law, etc.).

[Your preparer should have advised you of your option to recharacterize the Roth contributions to nondeductible traditional IRA contributions. This would allow you to file MFS and save the 20%, but at the cost of the future savings from the Roth IRAs.]

We were indeed so advised, but figured that would totally defeat the purpose of having a Roth in the first place. Since the Roth is so new anyway, I was floored by the AGI limit being SO low. Heck, even in 1997, or whenever it was started, what kind of income was $10K? I think airport panhandlers make more than that.

[3) has anyone with two Roths filed separately anyway, and if so, were there any repercussions?
Don't you dare. You'd have excess contributions subject to the 6% penalty every year until you finally remove them. Bite the bullet and decide which you'd rather have: the Roth IRA contribution or the savings from the MFS returns.]

I was never planning on it, just wondered if anyone had done it unknowingly (Since Block doesn't even seem to know about this!). The Roth is worth WAY more to us in the long run.

Thanks for the info!

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