Author Topic: Case Study -Untaxed foreign income -- where to put it?  (Read 1955 times)

laufen

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Case Study -Untaxed foreign income -- where to put it?
« on: June 05, 2014, 08:27:31 AM »
[edited for privacy]
« Last Edit: August 24, 2015, 02:40:22 AM by laufen »

nassoro

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Re: Case Study -Untaxed foreign income -- where to put it?
« Reply #1 on: June 05, 2014, 08:41:59 AM »
Can you still contribute to the 401(k)?  Otherwise, your only option might be to keep it in your current country of residence in something tax friendly (or at least that's my situation).

Where are you living now?

laufen

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Re: Case Study -Untaxed foreign income -- where to put it?
« Reply #2 on: June 05, 2014, 11:29:18 AM »
Living in Austria.  I guess I am just wondering if there is something other than a standard EFT or similar that I should be looking at.  Honesty I don't know much about investing in the US and especially not over here.

And I don't think I can still contribute to the 401k.
« Last Edit: June 05, 2014, 11:31:17 AM by laufen »

beltim

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Re: Case Study -Untaxed foreign income -- where to put it?
« Reply #3 on: June 05, 2014, 11:48:41 AM »
Any income that you exclude under the foreign earned income exclusion is ineligible to be placed in an IRA.  See http://www.irs.gov/publications/p590/ch01.html#en_US_2013_publink1000230355 under "What is compensation?"

Any income above the foreign earned income exclusion limit can be placed in an IRA, but you have to add back in the income that you excluded to get the contribution limits.

As for where to put the extra money, I'd just stick it in a regular (taxable) brokerage account in the US unless there's a tax-advantaged account in Austria that's portable to the US.

stor_stark

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Re: Case Study -Untaxed foreign income -- where to put it?
« Reply #4 on: June 05, 2014, 12:06:31 PM »
Any income that you exclude under the foreign earned income exclusion is ineligible to be placed in an IRA.  See http://www.irs.gov/publications/p590/ch01.html#en_US_2013_publink1000230355 under "What is compensation?"

+1

Did you mean foreign income tax credit (Form 1116)? I'm not certain, but I believe you can contribute to an IRA if you use this instead of the foreign income tax exclusion. The foreign income tax credit would probably be to your benefit since I'm assuming Austria's income taxes are higher than the US's.

laufen

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Re: Case Study -Untaxed foreign income -- where to put it?
« Reply #5 on: June 06, 2014, 01:21:57 AM »

As for where to put the extra money, I'd just stick it in a regular (taxable) brokerage account in the US unless there's a tax-advantaged account in Austria that's portable to the US.

This is what I'm going to end up doing, I suspect. Thanks.

johnintaiwan

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Re: Case Study -Untaxed foreign income -- where to put it?
« Reply #6 on: June 06, 2014, 09:08:53 AM »
Im in the same boat. IRA's are off limits to americans living abroad unless you pay US taxes on it. I stick with taxable accounts. It isnt a big deal now since the gains are so small they arent taxed at all yet.

I just send my money back quarterly when my dividends show up. It helps with the wire transfer fees and commission fees. If you find a way to invest foreign income legally in tax sheltered accounts lets me know. No brokers would even let me set up a taxable account with foreign income, luckily i still had one open through my bank.