- quote -

If you file jointly, your spouse's taxable compensation
(minus any IRA contribution she made) can count towards you
contributing to an IRA. See Pub 590 to find out if it all or
part will be deductible. If it is not deductible, you don't
have to do anything but most people would recharacterize it
as a Roth IRA contribution.

I recommend you see an EA or CPA when filing a return that
involves foreign income.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I appreciate the last two postings, and perhaps I am being
obtuse, but how do they address the question I posed in my
OP, which I will repeat: "I, perhaps misguidedly, made an
IRA contribtion for the current tax year, based on the small
amount of foreign earned income I will have, about $5K US or
$7K AUS. Because I know know that if the foeign earned
income is excluded, I will have no income for the year and
thus shouldn't have made an IRA contribution, can I?

"Just not take the exclusion. Pay the US taxes on the $7K AU
($5K US)? How and when or who determines the currency
conversion rate to determine how much I made, can
contribute, et-cetera?

"To complicate things, My partner is a high-earner. Can she
take the exclusion and I do not?"

Now to summarize:

1. Should I have made the IRA contribution? (If not, how
can I rectify this? Amended taxes?)
2. Must I take the exclusion and/or tax credit? Will this
change the answer to question 1?
3. How is the U.S. tax determined on foreign income? What
is the foreign exchange rate? Who sets it? When?
4. Do any of the above answers change, as I am filing jointly
and my spouse will be using all available means to lower
her high income.

Thanks again.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

parrisbraeside[at]yahoo.ca <fbaoic$gf$1[at]panix1.panix.com> wrote:

- quote -

We are talking of earned income, so foreign tax credit must
be taken on the 1116.

The 1116 limits the foreign tax credit to the amount of
US tax that would have been paid on those earnings.

So if the foreign tax was applied at a higher rate than
the US tax on that earned income, the tax credit is
limited to what the US tax would have been.

--
ArtKamlet at a o l dot c o m Columbus OH K2PZH

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"parrisbraes...[at]yahoo.ca" <parrisbraes...[at]yahoo.ca> wrote:
- quote -

How would that solve my problems?

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

garagecapital <garagecapi...[at]gmail.com> wrote:

- quote -

Have you thought instead of taking the Foreign Income
Exclusion to take instead the Foreign Tax Credit? That may
solve your problem. Especially if the income is earned in a
country which taxes more than the US.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I, perhaps misguidedly, made an IRA contribtion for the
current tax year, based on the small amount of foreign
earned income I will have, about $5K US or $7K AUS.

Because I know know that if the foeign earned income is
excluded, I will have no income for the year and thus
shouldn't have made an IRA contribution, can I?

Just not take the exclusion. Pay the US taxes on the $7K AU
($5K US)? How and when or who determines the currency
conversion rate to determine how much I made, can
contribute, et-cetera?

To complicate things, My partner is a high-earner. Can she
take the exclusion and I do not?

Thanks in advance.

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >