Can I contribute money to a Roth IRA in this non resident alien situation?
Here I have an interesting situation. I am a former American citizen, expatriated (non-covered). I still have my Roth IRA account. I earn money working for a UK company with a US parent, listed on the NYSE. The employer issues me RSUs periodically, upon which I pay UK income tax at the time of the RSU distribution.
The shares end up in my US based brokerage account, from which I typically sell quickly to avoid capital gain/loss, and transfer the money to a US based USD-denominated account.
I do not consider that I earn any money in the United States so I do not file American taxes. So here comes my question:
Can I choose to consider that some of my RSU funds are earned in the USA, and therefore put that money into my Roth IRA? For example, if USD 10,000 post-tax income appears annually in my accounts, can I elect to say that I feel 00 of this was earned in the USA, file a 1040 for line 21 "Other Income" 00 earnings, pay [CO] tax because that's beneath the threshold, and then deposit 00 into my Roth IRA?
Alternately, if I were to hold onto the shares and they generate 00 in short term capital gain, can I then file this as earned income in the USA and pay that 00 into the Roth IRA?
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In order to contribute to a Roth IRA you need "Taxable compensation".
From the IRS website, these are not considered taxable compensation:
Earnings and profits from property, such as rental income, interest income, and dividend income.
Pension or annuity income.
Deferred compensation received (compensation payments postponed from a past year).
Income from a partnership for which you don’t provide services that are a material income-producing factor.
Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b.
Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.
So, no, until you earn actual wages that are taxed in the US, the Roth is off limits. Can you do a back door Roth? Probably, but you may want to consult an accountant for that.
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