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URL:  http://boards.fool.com/roth-conversion-and-foreign-income-exclusion-30313249.aspx

Subject:  Roth Conversion and Foreign Income Exclusion Date:  10/11/2012  11:38 AM
Author:  khrushchv Number:  116780 of 123001

I was out running today when I had a spark of inspiration about a potential tax strategy (my best ideas come in the shower, not on the track!). But, I wanted to bounce the idea off the pros here to see what they think.

In 2013 all of my wages will qualify under the Foreign Income Tax Exclusion (FIE). I will have some passive income in the US but not really enough to move the needle. Here's my question: If I do a traditional IRA to Roth IRA conversion in 2013 will the marginal tax on the conversion amount be a function of my income without the FIE. Or, as I'm expecting, will the IRS make me pay the a marginal tax on the conversion as if I earned the foreign income in the US.

Perhaps an example is an easier way frame the question:

Wages: $60K (assume no o