can I contribute to my IRA if I live outside the country?

You're still an American citizen and you're still paying American income taxes, yes? If so, MAYBE you can still contribute.

You may contribute up $5000 or the amount of your taxable compensation for the year. See IRS Pub 590 for more details. The complication is that "compensation" in this case does, in fact, exclude any foreign earned income IF you exclude that income from your tax filing using the "foreign earned income exclusion".

Pub 590 - on compension:

Foreign Earned Income Exclusion:

Impact on IRAs:

Contributions to your individual retirement arrangements (IRAs) that are Traditional IRAs or Roth IRAs are generally limited to certain annual dollar limits (See Publication 590) or your compensation that is includible in your gross income for the tax year. Therefore, do not take into account compensation up to the amount of your foreign earned income exclusion and foreign housing exclusion, if any. Do not reduce your compensation by the foreign housing deduction.

Also, pub 54, Tax Guide for US Citizens and Resident Aliens Abroad:

Ok, so it looks like I CAN contribute, and I'm limited to the smaller of $5000 or my salary minus the foreign income exclusion, yes? Cool, thanks.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.