I have been living abroad for many years and using the FEIE (I have never revoked it). I now want to contribute to my Roth IRA, but the FEIE makes my taxable compensation $0, which means I can't make a contribution. May I choose to take less than the full amount of the FEIE that I qualify for?
For example:
My income is $26,000. I choose to apply the FEIE to $20,000 and have $6,000 in taxable income. I then make a $6,000 contribution to my IRA.
If this works, please let me know the best way to do this in TurboTax Home & Business.
If it doesn't work, is there a different type of retirement account that I could use? My income is from a multimember LLC, so a SEP IRA would be an option.
Thanks for any help!
No you cannot choose ... either you take it all or not. And there are no other retirement options if you take the FEIE.
Thanks for the reply @Critter-3 !
Ok. then I've got a few follow-up questions:
Can I amend my last 3 returns (I believe that's the maximum number of years I can go back) to revoke the FEIE? I only made an IRA contribution for 2019, so I assume after amended it would correct the problem and I wouldn't have to pay the 6% penalty.
I understand that once you revoke the FEIE you must wait 5 years before you have the option to claim it again. After amending the last 3 years, am I correct to assume that means I would then only have to wait 2 more years?
Thanks for your help, it's much appreciated!