Overseas income
Client worked over in Sweden last year thru a college program and was paid in Krona’s. Client converted to US Dollars and filled out a US 1040 showing the equivalent of 40k a year US income. Can they put money into 2 Roth for he and his wife since they filed a US 1040? Thanks
Permalink Submitted by Alan - IRA critic on Thu, 2017-03-23 19:54
Client cannot use any foreign earnings excluded under the foreign earned income or housing exclusions from US taxation as earnings for an IRA contribution for either themself or their spouse. And they cannot elect to exclude a limited amount of income (eg 29,000 of 40,000 in order to leave 11k for IRA contributions). They must exclude all income up to the limits or not elect the exclusion at all. I think they could elect a tax credit rather than the FEIE in order to still have earned income eligible to contribute to an IRA. They might want to look into that option with a tax professional.