1. Home
  2. Taxes General Forum
  3. Schedule C/foreign earned income exclusion/IRA

Schedule C/foreign earned income exclusion/IRA

Hello. I'm filling out my 1040 tax forms for 2008 and I have foreign income from self-employment overseas (Form 1099- misc. from a US university) for the first part of the year and regular overseas wages from a foreign university for the second part of the year. I understand that both types of income are eligible for the foreign earned income exclusion based on the physical presence test; however, is it ok/possible to NOT include the Form 1099-misc. Schedule C income on Form 2555 but to use Form

2555 only for the regular overseas wages? My thought is that if I don't include the self-employment income on form 2555, I'll have "taxable compensation" on line 12 and can therefore put money into a Roth IRA. The Form 1099-misc. income is only $12,000 gross so after deductions I don't think I'd owe taxes on it (other than SE tax). Or, since it was earned overseas, am I required to include it on Form 2555 with the rest of my overseas income? Thanks for any help!

-------------------------------------

##-----------------------------------------------## Newsgroup Access Courtesy

formatting link
Tax and Accounting Software ForumsWeb and RSS access to your favorite newsgroup - misc.taxes.moderated - 21441 messages and counting!##-----------------------------------------------##

Reply to
leebop
Loading thread data ...

Even if your AGI is 0 because of the foreign earned income exclusion, you can still contribute to a Roth. Focus on line 8 in the worksheet.

Go to

formatting link
Here are the key points.

  1. Enter your adjusted gross income from Form 1040, line 38; Form
1040A, line 22; or Form 1040NR, line 36 This may be 0 for you.

  1. Subtract line 2 from line 1. This may be 0 for you.

  2. Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 This may be 12,000 for you.

  1. Add the amounts on lines 3 through 11 Also 12,0000.

The above is your modified AGI for Roth purposes. So it looks like you can contribute the lesser of 5k or 12k. (Though if 50 or older you can contribute 6k, and if your company is in bankruptcy, then even more.)

  1. Enter:
*

$169,000 if married filing jointly or qualifying widow(er), *

$10,000 if married filing separately and you lived with your spouse at any time during the year, or *

$116,000 for all others

Reply to
removeps-groups

You cannot pick and choose which foreign source earned income to exclude. Either exclude all you are eligible for or exclude none.

Reply to
Bill Brown

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.