Foreign Earned Income
I have a client, a U.S. citizen, who is working for a Japanese company in Japan. He is paid in the Japanese Yen currency and will earn approximately $80,000 U.S. He is also eligible for the foreign earned income exclusion which will shelter this foreign earned income in full. He has no other earned income. Can he still contribute to a Roth IRA in 2013?
Permalink Submitted by Alan - IRA critic on Mon, 2013-07-08 17:18
Unfortuneately, he cannot make an IRA contribution because the definition of taxable compensation does not include income that is excluded. He also cannot choose to only include the foreign earned income that would cover his IRA contribution, as the exclusion is all or nothing.