In 2024 I rolled over my employer run retirement accounts (TSP) over to my Vanguard ROTH IRA. The total amount was about $96,000 but what I didn't realize was $40,000 of that was non-ROTH money. So when I rolled it over to my ROTH IRA it became $40,000 of taxable money in that year, resulting in around a $10,000 tax bill (though I'm not sure if that's before or after the late-file penalties).
I've been neglecting my financial and mental health for a while and I'm just finally doing my 2024 and 2025 taxes. I know I should have filed my taxes over a year ago and noticed this then (or even just not have been an idiot and done it in the first place), but is there anything I claim or deduct to somehow offset it or soften the blow for that year? I understand its my screw up but just looking for any possibilities.
Foolishly rolled over a Traditional Retirement Savings Account to a Roth IRA in a single year (2024) and now realize I owe I bunch of taxes. Anyway to minimize the damage?
byu/Lemonandapples inpersonalfinance
Posted by Lemonandapples
2 Comments
Unfortunately Roth conversions can’t really be undone anymore, so it’s probably more about minimizing the tax hit now instead of reversing it. Definitely check for deductions/credits you may have missed before filing late HSA contributions, education credits, retirement contributions, etc. A CPA might honestly save you more than they cost here.
You can use it as a lesson and learn how the different retirement accounts work. How income taxes and deductions/credits work.
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