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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