ROTH IRA eligibility from Foreign income

[RB8747]

Hi,

I am a US citizen living abroad and have a full-time non-US employer abroad.  Does this foreign income make me eligible to contribute to a ROTH IRA?  If the contribution eligible is prorated based on the income earned, is there a minimum salary required?

Thanks!

[GCEA]

Hi @RB8747 ,

As an American working abroad you can still contribute to an IRA or a Roth IRA but only to extend of the income you have not excluded from US taxes by claiming the Foreign Earned Income Exclusion and/or the Foreign house exclusion.  The amount of contribution is limited to the taxable income you report therefore the Foreign Tax Credit might be a better option if you do not want exclude your foreign earned income.

Roth contributions are limited to annual dollar amount. According to the IRS for 2023 , $6,500 for 2023, or $7,500 if you were age 50 or older by the end of 2023 or your compensation that is includible in your gross income for the tax year. If you exclude any foreign earned income by claiming any of the exclusions, you must add back he excluded amount for purposed of the IRA limits. 

For more detail information please visit the following links:

Individual Retirement Accounts - International 

Thank you and good luck!