# ROTH contribution if paying $0



## fcjb1970 (Apr 30, 2010)

Hi,

Hoping someone might understand this one enough to explain.

I am paying $0 in income tax this year due to earning less than $92,900 in foreign earned income. I am reading the documentation about ROTH contribution and if I read correctly because I do not make more than $5K in income that I DO pay taxes on I cannot contribute my annual $5K even though I claim $90K on my income taxes.

Is that true, am I ineligible to contribute to a ROTH account?

If so, what do I do because I already put the money in my account back in Sept before learning this?

Thanks in advance


----------



## Bevdeforges (Nov 16, 2007)

Basically, that's correct. You have no taxable compensation so you can't make a contribution to your Roth IRA. 

Given that contributions can be made up to the date that your tax return is due (i.e. April 15th - or this year April 17th), I'd say take the contribution you made in September out before the tax return due date, explaining that you are not eligible to make a contribution this year.
Cheers,
Bev


----------



## RødGrød (Oct 8, 2011)

If you have any foreign tax credits than you could use Form 1116 instead of the FEIE. Then you'd be able to contribute to your Roth. But maybe that doesn't work in UAE (if you don't pay income tax there).


----------



## makaloco (Mar 26, 2009)

Bev is right. Some expat friends of mine contributed to a Roth IRA for several years before learning that they weren't eligible. They had taxable income, but none of it was compensation. They had opened the Roth account using a relative's US address, so the financial company had no way of knowing they were excluding their earned income. When they reported the problem, the IRS fined them thousands of dollars but later returned their check based on their explanation and that of the company holding their IRA. Still, it was quite a mess to straighten out, so you're best off rectifying it as soon as you can.


----------



## fcjb1970 (Apr 30, 2010)

Thanks all. I will look into getting the money out of my Roth account.


----------

