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My girlfriend and I are planning on moving to France next year. My question for all of you is: Will I still be able to make contributions towards my Roth IRA? If working for a US company over there isn't an option, would it be possible to come back to the States on vacation and work in order to qualify? If not, what are some other long-term investment vehicles that I should consider as an ex-patriot living abroad? Any advice would be greatly appreciated. Thanks in advance.

Dan

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If you have no earned income taxable in the US, you can't contribute to an IRA.
To come back to the US on a vacation and earn enough to fund your IRA could work.
To work for a US company probably wouldn't work, as it would still be income earned in the foreign country.
Best wishes, Chris
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To work for a US company probably wouldn't work, as it would still be income earned in the foreign country.

Some U.S. companies deliberately structure their overseas offices so their U.S. employees overseas are treated like their U.S.-based employees for tax purposes. I know of one U.S. company (Boeing's office in the UK) that goes so far as to hire outside accountants to prepare personal income tax returns for their U.S. employees overseas because the various tax rules are so complicated.

I'll conceded the affected employees have to have unique skills, and the companies involved have to be the largest of the large companies. I'll also concede that France is a particularly difficult environment for U.S. ex-pats. Still, you may want to explore possibilities.

David Jacobs
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Will I still be able to make contributions towards my Roth IRA? If working for a US company over there isn't an option, would it be possible to come back to the States on vacation and work in order to qualify? If not, what are some other long-term investment vehicles that I should consider as an ex-patriot living abroad?

What company you work could matter but mostly wouldn't (unless it's the U.S. gov. or some gov't-based contract that means your income isn't "foreign"), but France does have a tax treaty with the US so you'd do well to become familiar with it.

Otherwise, to qualify for a Roth, the trick is to make more money than you exclude. Again, check your specific treaty, but for 2001 the foreign income exclusion limit will be $78,000. You may also be eligible to either exclude or deduct housing expenses, depending on which option is more advantageous. Get some reference figures to use for projection & do the math (forms 2555, 1116, Pub 54 and 514).

Yes, making $2,000+ while on vacation back in the US will also qualify you, but be careful you don't jeopardize your foreign income exclusion by overstaying your home leave. For the first year, you need to show you were in residence for 330 out of 365 days AND intending to stay long-term.

France is a very expensive place to live, tax-wise--rates are higher there. Know what you'll be subject to before you go. I believe the IRS site has at least summary information about current tax treaties...

Finally, calling yourself an "ex-patriot" may endear you to the French, but not to your local US embassy. Expats are mostly expatriates.

have fun,
kse4
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