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Topic: Hired as a contractor in London  (Read 2202 times)

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Re: Hired as a contractor in London
« Reply #15 on: September 25, 2020, 05:03:14 PM »
I don't believe you will qualify to contribute to a Roth IRA since your US modified adjustable gross income (MAGI) will be zero. My son's earned income last year appeared on form 1040 line 1 and then the FEIE on line 7a is the same amount but negative, so his AGI on line 8b is zero.  I may well be wrong though so worth asking and reading around although this article on the IRS website seems to say that you can't contribute more than your taxable compensation for the year.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

Yeah I know you are correct. I just wasn't sure if using the tax credit instead and not claiming the full credit (such that your remaining income is something like $2000, can you just use that as a taxable rate for US (which would be 0% I think) and then contribute to a Roth IRA.


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Re: Hired as a contractor in London
« Reply #16 on: September 25, 2020, 05:24:55 PM »
Yeah I know you are correct. I just wasn't sure if using the tax credit instead and not claiming the full credit (such that your remaining income is something like $2000, can you just use that as a taxable rate for US (which would be 0% I think) and then contribute to a Roth IRA.

You may be correct since the foreign tax credits are applied after the AGI and MAGI and the tax has been calculated.  The foreign tax credits are then applied.

Good thinking.
Dual USC/UKC living in the UK since May 2016


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