The wife (32F) and I (31M) make about $110,000 of taxable income and had triplets this year, so first time considering how the child tax credit affects tax planning.
I elected to max out my traditional retirement this year as I had thought that was the best decision at the time, but my work allows in-plan conversions. After the MFJ credit ($31,500), we would be in the 12% tax bracket. I played around with tax estimators and we have an estimated federal refund of about $4.5K coming. Knowing that the CTC is $2,200 per kid ($6,600 total), and the refundable amount is $1,700 per kid ($5,100 total), would it be preferable to maximize in plan Roth Conversions to obtain the $1,500 difference in credit between the refundable and non-refundable amount or keep the refund? Anything I'm not considering or feedback on this?
For more info, in 2-3 years, our income will likely be in the 24% or 32% brackets for a few years, than we'll likely slow down to be in the 10-12% bracket for the foreseeable future.
Considering The Child Tax Credit And It's Effect On Roth Conversion Amount
byu/afmdmsdh infinancialindependence
Posted by afmdmsdh
2 Comments
If you aren’t receiving the full credit, then it’s tax free income right up to the credits limit. Right?
At 80k of income after pre tax deductions, you can get the maximum amount of the refundable credit. What is the math you are doing that makes you think you wouldn’t have 5100 of tax liability? You only mention an expected refund, which isn’t what matters. Tax liability is what matters. When you ran the tax estimator how much income tax do they project WITHOUT adding the children?
Were the children in any paid childcare while you two were working?