Roth Conversions, I-Bonds, and 2210
Posted: Fri May 13, 2016 4:09 pm
I do a Roth Conversion each year to fill the lower tax brackets. And I deliberately overpay (with 4868) by $5K to get I-Bonds as the refund. This didn't work too well in 2015.
Problem is the AMT, and I couldn't know until November that it would apply. So the original estimate of Roth Conversion was too small (significantly), and I did an additional Roth Conversion in December (and paid the estimated taxes on the conversion amount). All seemed good except for the form 2210.
I've never been able to match the IRS figuring for the estimated tax penalty. Even with the CP30 notice, my numbers still come out wrong. It never mattered until I started using the tax refund to buy I-Bonds. For 2015 I calculated $300-350 for estimated tax penalty (put 350 on line 79), and included an extra $900 in the December 1040ES payment. It was more than enough to cover. But they calculated $364, cancelled the I-Bond purchase and refunded the extra $5+K. In re-reading the instructions for form 8888, anything beyond a simple math error cancels the I-Bond purchase.
Has anyone figured out a way to buy I-Bonds and still do a late-year Roth Conversion?
Problem is the AMT, and I couldn't know until November that it would apply. So the original estimate of Roth Conversion was too small (significantly), and I did an additional Roth Conversion in December (and paid the estimated taxes on the conversion amount). All seemed good except for the form 2210.
I've never been able to match the IRS figuring for the estimated tax penalty. Even with the CP30 notice, my numbers still come out wrong. It never mattered until I started using the tax refund to buy I-Bonds. For 2015 I calculated $300-350 for estimated tax penalty (put 350 on line 79), and included an extra $900 in the December 1040ES payment. It was more than enough to cover. But they calculated $364, cancelled the I-Bond purchase and refunded the extra $5+K. In re-reading the instructions for form 8888, anything beyond a simple math error cancels the I-Bond purchase.
Has anyone figured out a way to buy I-Bonds and still do a late-year Roth Conversion?