- April 23, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Seeking Guidance on IRA Contribution Rules
Hello everyone, I am seeking some guidance on IRA contribution rules. As a US citizen currently living and working abroad, I have recently submitted my 2022 tax return. In that year, the majority of my income was earned abroad, but I also did some tutoring in the US for a few months, generating $3,000 in income. I paid taxes on this income and have since been working abroad, utilizing the Foreign Income Tax exclusion to avoid double taxation (as I already pay German tax on it).
I am keen on maximizing my IRA contributions each year, but I am aware that it should consist of post-tax US income. Given that I am likely to owe little to no US tax this year due to the foreign income exclusion, my question is whether I can contribute the $3,000 earned and taxed in 2022 to my IRA in 2024, even if I end up paying no US tax this year.
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Your contributions for 2024 are based on your income in 2024. You can’t use income from 2022 to justify a 2024 contribution. If you exclude all of your 2024 income from US tax, then you can’t contribute to an IRA for 2024.
>**In order to contribute to an IRA while living abroad, you need to have income leftover after deductions and exclusions.** If you exclude all of your income with the FEIE and have no other sources of earned income, **you are not eligible to contribute to an IRA.** However, if you only exclude part of your income or claim the [foreign tax credit](https://www.hrblock.com/expat-tax-preparation/resource-center/filing/foreign-tax-credit-limitations-rules-for-u-s-expats/) (FTC) instead, **you may still be able to contribute to an IRA.**
[https://www.hrblock.com/expat-tax-preparation/resource-center/income/retirement/what-are-the-rules-on-iras-for-u-s-citizens-living-abroad/](https://www.hrblock.com/expat-tax-preparation/resource-center/income/retirement/what-are-the-rules-on-iras-for-u-s-citizens-living-abroad/)
If you have 2024 income that you aren’t excluding then you can contribute.
You may find these links helpful:
– [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement)
– [“How to handle $”](/r/personalfinance/wiki/commontopics)
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