Hi,
I'm in the middle of attempting to switch careers. I'm trying to switch into tech. During the best of times, entry level pay was around $110k (with people in my situation--college educated but not in a STEM field and specifically not computer science). Now, at the entry level, it's like a ghost town; no one is breaking in at the entry level. And if they are, it might be low ball pay like $60-70k.
I'm in the middle of finishing some projects for my web portfolio with honestly no clear end in sight. I'm learning as I'm going. And I'm going through some health issues too that have slowed my learning progress. I'm just expressing that I'm not sure when I'm going to be job application ready. My goal was the middle of this year, but I'm not sure.
With that in mind, I'd like to take advantage of more Roth conversions for tax year 2024 but am afraid of having the good problem of finding a job this year.
My rough tax estimates for tax year 2023 (waiting for all 1099s to come in the mail or be available online) using DinkyTown calculator (pretty much solely comprised of qualified dividends and Roth conversion):
1) Qualified Dividends: $38,500
2) Roth conversion: $160,200
(also had HSA deduction, bank interest, smaller things like that.. etc)
Total federal tax liability (met Safe Harbor last year due to not working in 2022 so I have a huge balance on April 15th): about $35k
My question is:
1) I'm aware that there are 2 Safe Harbor Rules -- For AGI over $150k-- 110% of last year's tax liability OR 90% of current year's tax liability. If I don't know if I'm going to work this year or not, should I just play it safe and go with 110% of last year's tax liability as a rule of thumb? I think it would give me more peace to plan this way. 110% of $35k is $38,500, so I should plan to pay about $9625 every 3 months?
2) I'm aware that "time in the market beats timing the market." Would a reasonable strategy be to wait for every month that has passed that I didn't work, do about 1/12th of the Roth conversion I would have done assuming I had not worked the entire year? For example, January just passed. Assuming I do $160k in Roth conversions again, I could now convert 160k/12months --> about $13k?
Thank you
I'm in the middle of attempting to switch careers. I'm trying to switch into tech. During the best of times, entry level pay was around $110k (with people in my situation--college educated but not in a STEM field and specifically not computer science). Now, at the entry level, it's like a ghost town; no one is breaking in at the entry level. And if they are, it might be low ball pay like $60-70k.
I'm in the middle of finishing some projects for my web portfolio with honestly no clear end in sight. I'm learning as I'm going. And I'm going through some health issues too that have slowed my learning progress. I'm just expressing that I'm not sure when I'm going to be job application ready. My goal was the middle of this year, but I'm not sure.
With that in mind, I'd like to take advantage of more Roth conversions for tax year 2024 but am afraid of having the good problem of finding a job this year.
My rough tax estimates for tax year 2023 (waiting for all 1099s to come in the mail or be available online) using DinkyTown calculator (pretty much solely comprised of qualified dividends and Roth conversion):
1) Qualified Dividends: $38,500
2) Roth conversion: $160,200
(also had HSA deduction, bank interest, smaller things like that.. etc)
Total federal tax liability (met Safe Harbor last year due to not working in 2022 so I have a huge balance on April 15th): about $35k
My question is:
1) I'm aware that there are 2 Safe Harbor Rules -- For AGI over $150k-- 110% of last year's tax liability OR 90% of current year's tax liability. If I don't know if I'm going to work this year or not, should I just play it safe and go with 110% of last year's tax liability as a rule of thumb? I think it would give me more peace to plan this way. 110% of $35k is $38,500, so I should plan to pay about $9625 every 3 months?
2) I'm aware that "time in the market beats timing the market." Would a reasonable strategy be to wait for every month that has passed that I didn't work, do about 1/12th of the Roth conversion I would have done assuming I had not worked the entire year? For example, January just passed. Assuming I do $160k in Roth conversions again, I could now convert 160k/12months --> about $13k?
Thank you
Statistics: Posted by Macaroni2314 — Sat Feb 03, 2024 11:20 am — Replies 0 — Views 27
