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Author: octaviano Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121594  
Subject: ROTH IRA for non-resident aliens Date: 7/6/1999 9:39 PM
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Hi:

I want to open an ROTH IRA account for my wife,
she doesn't work and she doesn't have a SSN, only a
Tax Identification Number. We are non-resident alines,
and eventually we are going back to our contry. Can I still open her an account, and kept it after we leave the country?, and of course taking the money out at her 59 1/2? Is there any tax implication here in the States for taking the money out for people living abroad (other than the 5 years and 59 1/2 old)?..

Rgds,
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16990 of 121594
Subject: Re: ROTH IRA for non-resident aliens Date: 7/6/1999 10:55 PM
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[[I want to open an ROTH IRA account for my wife,
she doesn't work and she doesn't have a SSN, only a
Tax Identification Number. We are non-resident alines,
and eventually we are going back to our contry. Can I still open her an account,
and kept it after we leave the country?, and of course taking the money out at
her 59 1/2?]]

Huh??? Why would you want to do this? If you are non-resident aliens, you have no current US tax liability unless you are generating income from within the US. And this income must be EARNED income in order for you to open up a traditional or Roth IRA account.

So, based upon your post, it appears that YOU have earned income...which is a bit unusual for a non-resident alien...isn't it?? And if you are eventually going back to your home country, why would a Roth IRA appeal to you? The Roth IRA basically allows for income to generate tax free some time in the future. If you are back in your home country in the future, you don't have any US tax issues anyway...right?

So I'm afraid that I'm missing exactly what you are trying to do and why you are trying to do it. I'll be happy to take another shot at your question once I understand what you are really trying to accomplish...both now and in the future.

TMF Taxes
Roy

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Author: octaviano Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16993 of 121594
Subject: Re: ROTH IRA for non-resident aliens Date: 7/6/1999 11:16 PM
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Thanks for your previous answer.. here are some points.

I have an income here in the states, for tax purpose I'm resident alien, but I'm not a green card holder. So I'm subject to tax income and all the other stuff.

What I want to do is putting some money away for our retirment, I'm not interested in taking that money before 60 years old... If I open a regular account with my wife's name then she will have income and for tax purpose she is a resident alien.
Will we be required to pay tax from this income?
If we need to pay tax, then I think ROTH IRA is a better option.. am I right?...

I also have the option of 401(k), Do I have the same implications?

Rgds,



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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16998 of 121594
Subject: Re: ROTH IRA for non-resident aliens Date: 7/6/1999 11:53 PM
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[[I have an income here in the states, for tax purpose I'm resident alien, but I'm not
a green card holder. So I'm subject to tax income and all the other stuff.]]

OK...then if you are treated as a resident alien for US tax purposes, then you'll pay taxes on that income just like any other US citizen. That's a BIG DIFFERENCE from your original post when you said that you were a non-resident alien.

[[ What I want to do is putting some money away for our retirment, I'm not
interested in taking that money before 60 years old...]]

I understand that. But in your original post, you claimed that you would soon be going back to your country. And I assumed that you would take your wife with you. If that is the case, it still seems that you would have no US tax liability issues at that time. Are you now telling me that you would stay in the US as under a resident alien status? If so, then a Roth IRA might be favorable to you.

[[ If I open a regular account
with my wife's name then she will have income and for tax purpose she is a
resident alien.
Will we be required to pay tax from this income?]]

Sorry, but you lost me here again. If you open up a "regular" account, you'll only have to pay tax on the interest earnings...regardless of if you are a resident or non-resident. If you open up a "regular" brokerage account, and don't live in the US in the future, your interest and dividend income may still be subject to US taxes, but any gains that you realize while you are a non-resident would not be subject to US taxes.

[[ If we need to pay tax, then I think ROTH IRA is a better option.. am I right?...]]

My general impression is yes. But I'm still a little fuzzy on where you will be when you turn age 59 1/2. If you are in the US, and treated as a resident alien for tax purposes, then a Roth IRA might be beneficial. But if you are back in your home country at that time, a Roth IRA could easily be meaningless.

You might want to go to the IRS web site and download/read IRS Publications 519 and 901 for some additional information on tax issues involving aliens.

TMF Taxes
Roy

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I also have the option of 401(k), Do I have the same implications?

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Author: amoose One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17170 of 121594
Subject: Re: ROTH IRA for non-resident aliens Date: 7/11/1999 8:53 PM
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So, based upon your post, it appears that YOU have earned income...which is a bit unusual for a non-resident alien...isn't it??

Hi! I've just moved to the US on a three year employment visa. As far as was aware that made me a non-resident alien, since I don't have the right to live here except in relation to my current job.

But are you saying that for tax purposes I should regard myself as a resident alien because I have US earned income? It sounds as if the IRS uses different meanings for these terms than the INS.

A Moose


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Author: vasanthshenoy Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 29517 of 121594
Subject: Re: ROTH IRA for non-resident aliens Date: 2/21/2000 7:36 PM
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Trust me friend.

You are a Resident alient for IRS purposes based on the 183 day substantial presence test of IRC src. 7701(b)

It really does not matter what INS thinks about you!

Since you earn here, you pay your taxes here. That is okay. But did you know that you have to pay social security tax eventhough you are NOT eligible for the benifits of social security.

Talk about Hipocrisy!!
-Vasanth

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