Discussion:Roth IRA conversion for citizen living abroad
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Discussion Forum Index --> Tax Questions --> Roth IRA conversion for citizen living abroad
| 8 February 2010 | |
| My client is planning to claim the foreign tax exemption in 2011 & 2012, as she is soon relocating to Asia.
Her income will be well below the $87600 limit. Is it a good idea to take advantage of that and convert Trad IRAs to Roth IRAs? Can she legally avoid having to pay income tax on the conversion, or is that income considered US income? | |
| 9 February 2010 | |
| 1. Modified AGI for purposes of the Roth conversion would add Foreign Earned Income exclusion back in.
2. Doesn't matter because for purposes of converting a traditional IRA to a Roth, the AGI no longer matters. At least not for 2010 and forward until they change the rule again. 3. The conversion amount will be taxable to her. The only income excludable, will be earned income while working in a foreign country. Everything else is taxable, even if it was earned while residing in a foreign country. 4. It will be taxable at a rate that takes into account the Foreign Earned Income. 5. It's probably still a good idea. | |
