The Foreign Earned Income Exclusion (FEIE), once elected, remains in effect until the taxpayer "revokes" the election. One way to revoke it is to not use it. Once a taxpayer revokes this election, the FEIE cannot be used for a period of 5 years without receiving permission from the IRS. (This permission is requested via a Private Letter Ruling, which has a $2,000 application fee, and permission is not automatically granted. See: Revoking your Choice to Exclude Foreign Earned Income )
While it is not possible to only exclude part of your income using the FEIE, it is allowed to take only the Foreign Housing Exclusion and elect not to exclude your income, which is one method to create taxable income in order to contribute to a Roth IRA. (The same caution applies here about "revoking" your Foreign Earned Income Exclusion election.) Note, TurboTax online cannot make this adjustment, but TurboTax Download/CD can be manually edited for this.
Taxpayers wishing to make contributions to IRAs who are also paying tax to their resident country may also elect to use the Foreign Tax Credit in lieu of taking the exclusion (this also allows the taxpayer to qualify for refundable child tax credits, if all other conditions for the credit are met.)
Choosing the Foreign Earned Income Election
So, there ARE ways to have foreign earned income, pay little to no tax, and contribute to your Roth IRA - particularly if you are paying other foreign taxes - but making a partial election to exclude Foreign Earned Income (other than electing only to take the housing exclusion) is not permitted.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
