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I am an expat living in Tokyo. Given the incredibly high cost of living($10,000 a month rent), my company compensates the differential reported as part of my payroll. This puts me way over the Roth IRA limit. Does this mean I can not contribute toRoth IRA or is there a special tax provision given my situation?

Austell
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Are you paying taxes to the US or to Japan?

Are you taking advantage of the provision in US tax law for ignoring money earned outside the country?
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Generally, you income earned in Japan is not eligible for a ROTH IRA anyway. The money you earn in Japan is tax free, you can't contribute this to a ROTH. You can still do a traditional IRA, I believe. Try to find an HR Block office, they should be able to tell you more details.

fredinseoul
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Are you paying taxes to the US or to Japan?

Are you taking advantage of the provision in US tax law for ignoring money earned outside the country?


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I am paying both US and Japan taxes. My company tells me that the "delta" they pay me for Tokyo expenses is tax compensated. My YTD pay shows the "delta".
An accounting firm handles filing; but they will not advise me unless I hire them separately.
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I should also clarify that all my earnings come from USA only. They pay me in USA. I just transfer the money to Tokyo
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Is your primary residence in the US or Tokyo? My guess is that is what will determine things. The rule of thumb (not the law) is that money contributed to an IRA must be earned (you paid social security tax on it).
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My experience with expat-related compensation (housing compensation, utilities, etc that are usually subsidized) is that it does count towards the limits for IRAs, 401(k)'s, and all other things that have limits for benefits to highly compensated folks.

When I was abroad, I argued to my company that assignment related bonuses and payments should not affect my 401(k) contribution limits, ie being considered highly compensated. They agreed and allowed me to contribute the max. However, during a plan audit last year, they ruled that I had over-contributed and returned the money (to be taxed).

There are no special tax provisions that I know of to provide credit for assignment related payments. It's all viewed as income to the employee.

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My experience with expat-related compensation (housing compensation, utilities, etc that are usually subsidized) is that it does count towards the limits for IRAs, 401(k)'s, and all other things that have limits for benefits to highly compensated folks.

When I was abroad, I argued to my company that assignment related bonuses and payments should not affect my 401(k) contribution limits, ie being considered highly compensated. They agreed and allowed me to contribute the max. However, during a plan audit last year, they ruled that I had over-contributed and returned the money (to be taxed).

There are no special tax provisions that I know of to provide credit for assignment related payments. It's all viewed as income to the employee.
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It is good know your experience. I have a start point.
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