Modify the Roth Optimizer to be limited to a MAGI of $160,000. This would allow the individual to take advantage of the American Opportunity Tax Credit. This is a $2,500 per child college tax credit available to the parents. Alternatively, allow the conversion limit in any particular year to be set by the user.
We've had the same situation the past two years with the American Opportunity Credit. Didn't attempt to model it in Pralana, just figured out the max Roth conversions I could take manually. It would be nice if Pralana would allow the user to set a conversion limit for one or a series of years.
Hi Myron,
The base optimization tells me that I would be better off doing a larger conversion than would allow me to take the AOTC. I have manually tried 2 scenarios where I set the conversion at 12% and 22% tax brackets and added tax free income equal to the AOTC. I used 12% and 22% because the $160,000 is in between (actually closer to 22% for married filing jointly). Neither the 12% or 22% tax bracket scenarios gives a better outcome than doing the larger Roth conversion and not taking the AOTC. But as you say, it would be nice to be able to set the conversion limit at the proper value.
Regards,
Lou
