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Question
How does a backdoor Roth IRA work?
AI accountant’s answer:
A backdoor Roth IRA is a strategy used by individuals whose income exceeds the limits for contributing directly to a Roth IRA. The process involves making a contribution to a traditional IRA and then converting that contribution to a Roth IRA. Here's a step-by-step explanation: 1. Contribute to a traditional IRA: If your income is too high to contribute directly to a Roth IRA, you can still make a contribution to a traditional IRA. There are no income limits for contributing to a traditional IRA, but the contribution might not be tax-deductible if you or your spouse have access to a workplace retirement plan. 2. Convert to a Roth IRA: After making a contribution to a traditional IRA, you can convert those funds to a Roth IRA. To do this, you'll need to contact your IRA provider and request a conversion. This process may also be known as a "Roth conversion" or "Roth rollover." 3. Pay taxes on the conversion: When you convert funds from a traditional IRA to a Roth IRA, you'll need to pay taxes on the pre-tax amount you converted. This includes any tax-deductible contributions and earnings on those contributions. If you made non-deductible contributions to your traditional IRA, you only pay taxes on the earnings portion when converting. Keep in mind that you'll need to report the conversion on your tax return and should set aside money to cover any taxes owed as a result of the conversion. Following these steps allows individuals with high incomes to access the benefits of a Roth IRA, like tax-free growth and withdrawals in retirement. However, it's essential to consider the potential tax implications and evaluate whether a backdoor Roth IRA conversion fits into your overall financial plan.
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Michael Eaton, CPA
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Keeper’s AI Accountant

This AI accountant is powered by GPT-4, but has up-to-date knowledge of tax law. It’s been trained on federal and state tax updates for 2023. With credentialed tax professionals fact-checking its responses, it applies IRS rules to real-world situations.

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Ask an AI Accountant

A free tool by

Question
This is some text inside of a div block.
AI accountant’s answer:

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Comment from reviewer
This is some text inside of a div block.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Not Correct.
Icon check
Looks good

Keeper’s AI Accountant

This AI accountant is powered by GPT-4, but has up-to-date knowledge of tax law. It’s been trained on federal and state tax updates for 2023. With credentialed tax professionals fact-checking its responses, it applies IRS rules to real-world situations.

Find write-offs.
File taxes.

Keeper helps independent contractors and freelancers discover tax deductions and file taxes.

Get started