Foreign earned income exclusion


L

L K Williams

A client wishes to make a contribution to a Roth IRA but all
of her earned income amounts to less than the available
exclusion. I have looked everywhere I can think to find the
IRS position on taking less than the full exclusion in order
to have taxable earned income.

In other words, she wants to take $4,000 less than her
actual salary as a foreign earned income exclusion. Thus,
she could make a $4,000 contribution to her Roth.

In all my years of working with expats, this has never come
up before. I know that the exclusion is optional but is the
amount of qualifying income also optional?

Anyone have any comments?

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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P

Phil Marti

L K Williams said:
A client wishes to make a contribution to a Roth IRA but all
of her earned income amounts to less than the available
exclusion. I have looked everywhere I can think to find the
IRS position on taking less than the full exclusion in order
to have taxable earned income.

In other words, she wants to take $4,000 less than her
actual salary as a foreign earned income exclusion.
I have researched this in the past. I can't give you a cite
other than "there's no way to do it on the form," but she
can't do it. It's all or nothing.
 
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