Dec
14
2009

  Complicated Taxes, Again

I hadn't expected this year's taxes to be complicated. But because of enormous medical expenses combined with smaller-than-usual income, we'll handily exceed the 7.5% threshold for claiming the medical expense deduction on Schedule A.

And since we paid a fair amount of state tax (it's claimed in the year paid, not the year it's paid for, so our last 2008 tax payments go on this year's schedule) and still made some charitable contributions, we might itemize our taxable income right down to nothing.

But we also wanted to convert some of our regular IRAs to Roth, which would increase our income, also potentially reducing our medical expense deduction. I need to look into the rules. It is more complicated than I anticipated, I'm afraid the Roth conversion income and itemized deductions might get into some sort of feedback loop which will make planning complex.