When a regular IRA is converted into a Roth IRA, the amount of the conversion is reported as taxable income on the income tax return. Dear Colleague Letter GEN-99-10 indicated that since the family does not actually have additional available income or assets, it is acceptable to adjust income to eliminate the amount attributable to the Roth IRA conversion. The Dear Colleague letter also indicates that one may make a corresponding adjustment to the taxes paid. However, some financial aid administrators feel that to the extent that the taxes must be paid regardless of the financial aid treatment, they represent an actual non-discretionary expense of the family that should not be reduced. On the other hand, to the extent that the prior tax year income is a proxy for award year income, one should make a corresponding adjustment to taxes paid in order to reflect the impact of the anticipated taxable income during the award year. Most financial aid administrators will adjust taxes paid when the adjustment to income reflects a change in taxable income.