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Learning, Sharing, and Teaching => Investor Alley => Topic started by: jzb11 on May 15, 2015, 06:04:30 AM

Title: Income tax Exclusion, any reason to invest via a SEP?
Post by: jzb11 on May 15, 2015, 06:04:30 AM

I'm currently on an international assignment and as a result I qualify for the US foreign income tax exclusion. As a result I will not pay income tax on my income up to 97,000. My income is unlikely to exceed this amount.

As a result, since I will not see any of the tax benefits by using a SEP, is there any reason why I would still decide to use a SEP (I work as a contractor in this role) for investing purposes? My current idea is to use a post tax account for the flexiblity of being able to withdarawl/use the funds without restrictions.


Thank you for your time.

Title: Re: Income tax Exclusion, any reason to invest via a SEP?
Post by: forummm on May 15, 2015, 09:06:06 AM

I can't think of any sufficient reason you'd want to pay taxes later on income that you can receive without taxes now. Is there any way to make nondeductible contributions or Roth contributions? That would make sense.

Title: Re: Income tax Exclusion, any reason to invest via a SEP?
Post by: MrMoogle on May 15, 2015, 11:54:24 AM

Yeah, I'm not sure about SEPs, but I took advantage of Roth 401k and Megabackdoor Roth when I was overseas.  No US pre or post taxes :D

Title: Re: Income tax Exclusion, any reason to invest via a SEP?
Post by: MrMoogle on May 15, 2015, 11:55:34 AM

Oh and realize if you do the exclusion you can't do IRAs on the excluded money.  And you either take a full exclusion or none at all, so you can only do a Roth IRA in a very small window above the exclusion and below the Roth limit.