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If you qualify to have your Foreign Income excluded from your tax return would you qualify for a ROTH IRA contribution? There is minimal interest income.

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Level 1

Taxpayer receives $60,000 foreign income wages and $1000 in dividends and interest.  He qualifies for the exclusion of $103,000 of his foreign income.  When calculating the MAGI is that before the exclusion of foreign incoime?

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Level 15

Maximum contribution to Roth IRA is defined under §219(b), which stipulates that it cannot exceed the lesser of—

(A) the deductible amount, or

(B) an amount equal to the compensation includible in the individual’s gross income for such taxable year.

Unless part of your client's compensation could not be fully excluded (e.g. because of US workdays or compensation sourced to earlier years for which no excess FEIE could be claimed), your client doesn't have any compensation includible in gross income.

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Level 15
Excluded foreign earned income does not count toward earned income for a ROTH contribution.

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Highlighted
Level 15

Maximum contribution to Roth IRA is defined under §219(b), which stipulates that it cannot exceed the lesser of—

(A) the deductible amount, or

(B) an amount equal to the compensation includible in the individual’s gross income for such taxable year.

Unless part of your client's compensation could not be fully excluded (e.g. because of US workdays or compensation sourced to earlier years for which no excess FEIE could be claimed), your client doesn't have any compensation includible in gross income.

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Level 15

To answer your other question, no, you can't choose to exclude only a portion of the excludable income.  §911 is an all-or-nothing election.  Choosing to exclude only a portion is a position that is inconsistent with the election and would be treated as a revocation, with which, the taxpayer would be barred from electing §911 again until the 6th tax year unless approved by the IRS.

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