Apr 8

I am a US citizen, working (since 4 years ago) as a teacher in China. I earn $40000 per year and this income is excluded from my tax return. I am taxed in China, so I presume my accountant did this exclusion for me so I don’t pay taxes in the US for this income.

I have learned that I cannot use this income to contribute to a ROTH-IRA.

My question is: should I go back on the decision to exclude this income from US taxes? This would mean I have to pay taxes on it. But it would let me contribute $5000 to the ROTH.

Which one is better to have? A ROTH with the tax free compounding that it brings, or a higher income out of which I cannot contribute to a ROTH (but I can contribute to other, taxable vehicles)?

Thank you!


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