2010 Roth Conversions: Don’t Forget to Report Second Half of Taxable Income this Year

Income Tax Note

If you converted a pre-tax retirement account, such as a traditional IRA or a workplace retirement plan, into a Roth IRA in 2010, you were granted special relief from the typical procedure of having to report the conversion for the year in which it occurred. For example, the taxable amount from a 2012 Roth conversion must be included in full on your 2012 tax return. Under a special rule that applied only to Roth conversions in 2010, taxpayers were allowed to spread the resulting taxable income over two years (one-half included in taxable income for 2011 and one-half included in taxable income for 2012). If you converted amounts to a Roth IRA in 2010, you must report half of the resulting taxable income on your 2012 return.

The IRS has created specific details under a general discussion entitled, “2012 Reporting of 2010 Roth Rollovers and Conversions,” available by clicking here: 2012 Reporting of 2010 Roth Rollovers and Conversions