good to know, Jeff.
One more thing…I answered a couple of ads in the newspaper for accountants who can do US returns. They all wanted 6 figures to do a 1040. If I remember correctly, one person’s fee was $600,00NT. And yes, before I hung up I told them they were f@#%&@* high if they thought I would lay that kind on money on their table.
Just insane, but maybe they were fishing for a bigger catch than I.
I’ve never tried it from Taiwan, but couldn’t you just get H&R Block or some US tax accountant to do your taxes? I use H&R Block in the States and last time it cost <USD150. But filing yourself is pretty straightforward, unless you have overseas (home country) investments, property, income, etc.
my dad will do you for less than that, db, might have to go to staten island ny though he’s not crazy about flying 
If an American citizen works in Taiwan, makes less than US$ 70,000, and files taxes, can that person open an IRA in the US? My understanding (and this could be wrong) is that it has to be “earned income.” Any experience about paying taxes in Taiwan, filing taxes in the US, and opening an IRA is welcome. Thanks.
I think your understanding is correct.
Sorry, my last question wasn’t clear. Here is another go: Is it possible to open an IRA in the US under the exemption? In other words, even though I must file taxes, can I still open an IRA based on income that I am not paying taxes on?
Does money earned in Taiwan that is not taxed under the US$ 70,000 exemption still count as “earned income” (“earned income” is required to open an IRA)?
Man, I don’t think that I am making any sense. Sorry. If anyone has experience opening an IRA in the US and paying taxes in Taiwan, please post with your experience.
Thanks.
If an American citizen works in Taiwan, makes less than US$ 70,000, and files taxes, can that person open an IRA in the US? My understanding (and this could be wrong) is that it has to be “earned income.” Any experience about paying taxes in Taiwan, filing taxes in the US, and opening an IRA is welcome. Thanks.
I max out my Roth IRA yearly, From my understanding as I have read it. If you worked for the money, then you can put the money into an IRA.
I’ve done it for the past 3 years and have had no problems. I doubt they even check these things or if your company who you invest your IRA with would care. You can go to www.vanguard.com and ask them. They’re extremely professional and have a list of numbers for you to call if you have questions.
CYA
Okami
I max out my Roth IRA yearly, From my understanding as I have read it. If you worked for the money, then you can put the money into an IRA.
I’ve done it for the past 3 years and have had no problems. I doubt they even check these things or if your company who you invest your IRA with would care. You can go to www.vanguard.com and ask them. They’re extremely professional and have a list of numbers for you to call if you have questions.
CYA
Okami
[quote=“fee”]Sorry, my last question wasn’t clear. Here is another go: Is it possible to open an IRA in the US under the exemption? In other words, even though I must file taxes, can I still open an IRA based on income that I am not paying taxes on?
Does money earned in Taiwan that is not taxed under the US$ 70,000 exemption still count as “earned income” (“earned income” is required to open an IRA)?[/quote]
Fee, I have no idea about if you can open the account or not, but I am very sure that you cannot put any money in it if you are not making any money in the USA.
You must have made money in the US in order to put money in your IRA. I don’t know about Roth IRA’s but it is certainly true for Traditional IRA’s. I had to withdraw money from my IRA my second year in Taiwan as the IRS basically said it was an illegal deposit. Any foreign money you earn cannot be counted as money you made in the US, there may be special circumstances, for example maybe you work for Intel or something.
Keep in mind also that if you only make US$600 in the US then you can only deposit US$600 into your IRA account, you can’t max it out unless you earn that much money in the US.
Hobart,
The IRS can impose a fine on you for not filing; I think it is around US$3,000. Either they or the USPS lost my return a few years ago, and they never bothered to notify me that they didn’t have it in their system until the limit for filing amended returns (I guess it applies to any sort of return, three years) had passed.
You should find a US-based accountant and discuss the problem. I can give you the name and contact info for the one who helped me out of the mess (Seattle area). She charged me about US$300 to deal with the mess, but that was for one year, not seven.
BTW, once the three-year deadline is past, you cannot get any money that you might have been owed refunded to you. They can, however, demand that you pay back taxes and fines for all eternity. On an initial audit, they can go back at most seven years, but if they uncover problems they can insist on data since at least 1913, if not 1895.
Fee, Jeff is correct. I just talked with my brokerage about adding money to my IRA’s while in Taiwan; they told me that the income must be “earned income” from inside the U.S.
You can look it up on the IRS website. I believe you will want Publication 590, available in PDF format (also get the supplement).
Sad to say, but you are looking at some fines and penalties for daring to put money in an IRA like that. You’ll want to talk to an accountant and/or a brokerage.
BTW, “passive income” from stock trades, dividends, and other investments cannot be used for IRA contributions, so that’s not a way out either.
I had this exact problem come up with investing in IRAs while working in Taiwan. The short answer to your question is no.
Here was my situation: I’d invested in traditional IRAs over the last two years (2001 and 2002) while I was working in Taiwan. Besides this earned income, I had several other investments in the states.
However, the person who does my taxes, and who is based in the states, informed me that I could not invest in an IRA unless I revoked my tax exempt status for overseas income. Since I did not earn over 70,000 US dollars in Taiwan, and I had claimed the tax exempt status, I was not eligible for investing in an IRA.
I asked her if I could use the money I earned in the US (which was taxed) to invest in an IRA. Again, the answer was no. Any money invested in an IRA has to be earned taxable income. If you have investments in the states that are making money, that still won’t work.
Let’s say you have already invested in the IRAs – as I did – and want to know if you can retroactively revoke your tax exempt status so that you don’t have to remove your money from the IRAs. Can you do this?
The short answer to this is maybe, but there are some snags. If you revoke this foreign income exclusion status, you cannot elect to again exclude foreign income for the next five years. You can request the IRS to change this, but it is a costly process and there is no guarantee they will do so. And just in case you are wondering, you also cannot just make a portion of your income taxable (such as the $3,000 needed).
Let me know if that is clear.
[quote=“MaPoDoFu”]Sad to say, but you are looking at some fines and penalties for daring to put money in an IRA like that. You’ll want to talk to an accountant and/or a brokerage.
BTW, “passive income” from stock trades, dividends, and other investments cannot be used for IRA contributions, so that’s not a way out either.[/quote]
Mapodofu is correct on both these counts. I will be paying either fines and/or a penalty for my IRA investments in 2001 and 2002.
However, according to the person who does my taxes, you can invest in an IRA if you forego your tax exempt status on any overseas income.
If you invested in an IRA for 2003, however, you have plenty of time to remove your money from the account without penalty or fines. (The deadline for 2002 just passed a couple of months ago.)
You can make foreign income and put it into an IRA. I’ll dig up the link and worksheet from the IRS. I did it and found that I could put money into it. This is a bit of a grey area and I should keep that link handy(print it up actually) for my eventual run in with the IRS. Give me a few days and I’ll get it for you and double check it myself.
CYA
Okami
How about us Canadians? Do we have to file too? If so, I am a bit late.
It’s publication 590 from the IRS at this link:
I hope I’m right
CYA
Okami
Cold Front Wrote:[quote]I asked her if I could use the money I earned in the US (which was taxed) to invest in an IRA. Again, the answer was no. Any money invested in an IRA has to be earned taxable income. If you have investments in the states that are making money, that still won’t work[/quote].
From what I understand, so long as you are making money in the US coming from a US source, you CAN deposit money into your IRA, but only up to the amount you earned, not more than. The income must be taxable, earned income, so as said previously money comming from stocks, etc, cannot be used as earned income to deposit money into your IRA.
Okami, I am looking forward to seeing your information, because I have contacted the IRS three times about this issue and each time they have said the same thing, if I am living overseas and do not have an earned income int he US, then simply put, I cannot put anything into my IRA.
Every time I have asked the IRS why, I get nothing, I am quite pissed off!
Note that I haven’t actually tried this, but according to this site, you can contribute to a Roth IRA from overseas, but you cannot contribute to a traditional IRA.