If you converted to a Roth IRA or designated Roth account in 2010 you must report (in most cases) half of the resulting taxable income on your 2012 return.

Normally, Roth conversions are taxable in the year the conversion occurs. For example, the taxable amount from a 2012 conversion must be included in full on a 2012 return. But under a special rule that applied only to 2010 conversions, taxpayers generally include half the taxable amount in their income for 2011 and half for 2012, unless they chose to include all of it in income on their 2010 return.

Roth conversions in 2010 from traditional IRAs are shown on 2012 Form 1040 or Form 1040A. Conversions from workplace retirement plans, including in-plan rollovers to designated Roth accounts, are also reported on Form 1040 or Form 1040A.

Taxpayers who also received Roth distributions in either 2010 or 2011 may be able to report a smaller taxable amount for 2012. Taxpayers who made Roth conversions in 2012 or are planning to do so in 2013 or later years must file Form 8606 to report the conversion. For details contact your tax advisor.

As in 2010 and 2011, income limits no longer apply to Roth IRA conversions.