File Your Taxes Late -Reason #2

by Fern Alix LaRocca CFP® EA · 0 comments

File your taxes late? Yes, some tax rules are made to be broken. The rule I am talking about is filing your taxes by April 15th. Some people can prosper by not filing timely. Here is #2 of 3 of those situations:

1. Roth IRA Conversion

2. Many taxpayers are setting up multiple Roth Conversion accounts in early January with a separate account for each asset class, and then waiting the maximum 22 months (until October 15th of the following year) to see which assets have prospered and which haven’t. They plan to undo the conversions for each account that declines in value (called a re characterization) after conversion so that they don’t have to pay tax on the higher value.

3. Homebuyers

All taxpayers qualify for an automatic 6 month extension (From 4868) but it is not an extension of payment. If you owe tax and don’t pay it, the current rate of interest (4%) will be charged from April 15th till paid.

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