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10 new tax law changes to know
If you converted a traditional IRA to a Roth IRA in 2010, you probably elected the default tax payment option in connection with your retirement plan conversion.
That choice allowed you to defer the IRA conversion tax last year and spread payment of it over two future years. Half of that payment is now due.
You must report half of the taxable IRA conversion amount on your 2011 return. The remainder will be reported and paid on your 2012 return.
What if you have some extra cash and want to pay all the IRA conversion taxes on your 2011 return? Sorry. You are stuck with the two-year payback. So stash that money in an interest-paying account so you’ll have it (and a bit more) for your 2012 filing.