Roth IRA for new immigrant

[80k 0]

Hello,

My wife came on a CR-1 mid January of this year. I want to open up a Roth IRA right away for her. I was going to do it for 2006 tax year.

However, since 2005 can still be contributed to up until mid-April... I was wondering if I could still contribute for her for 2005. We were married in 2005, so she was my spouse, and non-working spouses are allowed to contribute to a Roth under certain salary conditions. The only kicker here is that she didn't arrive until 2006.

Has anyone run into this, and what would you advise?

THank you!

[butuan 0]

yes you can

[kc456 0]

yes you can

That makes sense, since you were married in 2005. It probably does not matter whether or not you lived together.

[ace13 0]

YES! Do it! you are smart

[Ameristralian 0]

Hello,

My wife came on a CR-1 mid January of this year. I want to open up a Roth IRA right away for her. I was going to do it for 2006 tax year.

However, since 2005 can still be contributed to up until mid-April... I was wondering if I could still contribute for her for 2005. We were married in 2005, so she was my spouse, and non-working spouses are allowed to contribute to a Roth under certain salary conditions. The only kicker here is that she didn't arrive until 2006.

Has anyone run into this, and what would you advise?

THank you!

Well I should know this, but not 100% sure. The only question that I would have as a banker is regarding her social security number. That, in a way, is when the government can start to monitor your financial doings. So if she didn't have the SSN until 2006, then I would say she couldn't contribute for 2005. Let me check with my boss!

[Anastassia 0]

in my opinion if your goal is to deduct the IRA contribution from income tax, it should be a traditional IRA, not Roth IRA.

[Ameristralian 0]

Hello,

My wife came on a CR-1 mid January of this year. I want to open up a Roth IRA right away for her. I was going to do it for 2006 tax year.

However, since 2005 can still be contributed to up until mid-April... I was wondering if I could still contribute for her for 2005. We were married in 2005, so she was my spouse, and non-working spouses are allowed to contribute to a Roth under certain salary conditions. The only kicker here is that she didn't arrive until 2006.

Has anyone run into this, and what would you advise?

THank you!

Well I should know this, but not 100% sure. The only question that I would have as a banker is regarding her social security number. That, in a way, is when the government can start to monitor your financial doings. So if she didn't have the SSN until 2006, then I would say she couldn't contribute for 2005. Let me check with my boss!

Well boss number one said she thinks you can do it, but not 100% sure. I have an 800 number hotline I can call in regards to all the IRS regulations and whatnot, so I'll try and remember to do that for you on Tuesday (not available today, closed on Monday). If you PM me that would serve as a great reminder, but I'll try to remember anyways. These kind of questions help me learn. Thanks mate!

[80k 0]

in my opinion if your goal is to deduct the IRA contribution from income tax, it should be a traditional IRA, not Roth IRA.

Our goal is not to deduct from income, and we feel a Roth is superior to a traditional IRA for our future.

Well I should know this, but not 100% sure. The only question that I would have as a banker is regarding her social security number. That, in a way, is when the government can start to monitor your financial doings. So if she didn't have the SSN until 2006, then I would say she couldn't contribute for 2005. Let me check with my boss!

Well boss number one said she thinks you can do it, but not 100% sure. I have an 800 number hotline I can call in regards to all the IRS regulations and whatnot, so I'll try and remember to do that for you on Tuesday (not available today, closed on Monday). If you PM me that would serve as a great reminder, but I'll try to remember anyways. These kind of questions help me learn. Thanks mate!

Thanks for looking into this! Actually, since there is a provision that allows non-residents to be treated as residents if they were married to a US citizen or resident, i believe that the SSN or tax ID number does not need to be established until the tax return for that respective year.

For instance, we plan on filing a joint return. The SSN was established in 2006, but it'll be available for us to use on our return this spring for the 2005 tax year. Does that make sense?

I look forward to hearing from you, and in fact, I think there should be a lot of people on Visajourney who have their spouses arriving between January and April and have the opportunity to do this. Hopefully others can take advantage of this too!

[80k 0]

Well, after some serious digging around and reading through tax laws and documents, i've decided that there is much more supporting rules that says that she CAN open a Roth.

The main issues are that all nonresident aliens are legally allowed to elect to be treated as a resident for the entire tax year if both spouses agree. From there, it clearly states that all tax treaties must remain consistent with her status as a resident for the entire year.

Additionally, a lot of nonresident aliens have successfully opened Roth IRA's for themselves without any red tape. The main issue to them is the fact that the money must remain in the US unless it is withdrawn with penalties.

So I am going to go ahead and open one up! As an FYI to others: There is a retirement contribution credit that the federal government gives to low income earners who contribute to any retirement plan, even a Roth (keep in mind, this is a credit, NOT a deduction. Deductible IRA's like traditional ones can give you both a credit AND a deduction, if you qualify). This year, i worked very little, and am under the income requirement, so luckily I was able to get a credit of $400 for our Roths

[clloyd 0]

Taking advantage of the "savers credit" is a good thing. However, it is set to expire at the end of 2006 if it is not renewed by Congress. For the time being, take advantage of the free money. I know my wife and I are.

[cmartyn 0]

I dont think he qualifies for the savers credit if they are woried about maxing out last years Roths. lol.

[kc456 0]

Roth is a good investment since any returns will be tax free to you. You can also use it for a 1st time home purchase, if you held the investment for at least 5 yrs (not sure if all details are correct, but along these lines).

[bobo 2]

So a Roth IRA is funded with after-tax money and only the interest one will get is tax free?

Thank you!

[80k 0]

So a Roth IRA is funded with after-tax money and only the interest one will get is tax free?

Thank you!

All accumulated interest, dividends, and capital gains on a Roth IRA are tax-free when it is finally distributed (as long as you don't withdraw early or if as long as you meet other qualified conditions).

[kc456 0]

All accumulated interest, dividends, and capital gains on a Roth IRA are tax-free when it is finally distributed (as long as you don't withdraw early or if as long as you meet other qualified conditions).

That's what makes it a good investment.