Reminder - 2010 Roth conversions to be reported on 2012 returns 

February 19:   The IRS today issued a release reminding individual taxpayers who converted amounts to a Roth IRA or designated Roth account in 2010 that, in most instances, they must report half of the resulting taxable income on their 2012 returns.

Background

The Small Business Jobs Act of 2010 allowed rollovers from elective deferral plans to a plan that included a designated Roth program. The amount was taxable when the contribution was made, but if the contribution was rolled over in 2010, the amount could—at the taxpayer’s election—be taxed ratably over a two-year period beginning in 2011.


Read KPMG’s description [PDF 4.24 MB] of the tax provisions in the Small Business Jobs Act of 2010.

IRS release

As today’s IRS release IR-2013-21 [PDF 30 KB] explains, Roth conversions normally are taxable in the year the conversion occurs, but under the special rule that applied only to 2010 conversions, taxpayers generally are to include half the taxable amount in their income for 2011 and half for 2012, unless they elected to include all of it in income on their 2010 return.


Today’s IRS release also notes that taxpayers who also received Roth distributions in either 2010 or 2011 may be able to report a smaller taxable amount for 2012.




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