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Financial Planning / Tax Strategies


Subject:  Re: Roth Conversion and Foreign Income Exclusion Date:  10/11/2012  11:42 AM
Author:  TMFPMarti Number:  116781 of 131120

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.

Sorry, but you're late to the party. Enough people took advantage of the calculation that totally excluded the FEI that Congress clamped down a few years ago. Your tax is calculated as you expected. See the tax calculation worksheet in the 1040 instructions.

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