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I am moving back abroad in February after about a half year in the US. As I understand it, any foreign excluded income can't count towards qualifying to contribute to a Roth. However, since I will still be paying income tax on about the first 40 days of 2013, I am wondering if I can contribute to my Roth and by how much.
Will I calculate what portion of the year I am present and that will be my taxable income (and thus eligible to add to a Roth)? For instance 40/365 means I will be in the US for 10.95% of the year. Does this mean I can put 10.95% of my income into a Roth IRA for 2013, up to $5000? (For information purposes, my wife and each make around 2-30,000, so there is no danger of us surpassing the cap on excludeable income.)
The only thing I see complicating this is that I will be paid slightly more during the period when I am abroad because of a cost of living adjustment.
I know this is a bit of an odd-ball question. Probably the easiest thing would be to wait until I've done my 2013 taxes, but if I can put some of the money in in January, I'd like to do that. I'm hoping one of you has done this before.
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- Joined: 23 Feb 2011
Certainly not an odd-ball question. Yes, you can fund a ROTH with your domestically earned income. The amount is self-assessed on Form 2555, and your formula looks OK, though I'd say adjusting for the lower salary while in the USA would be the most appropriate way.
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