IRA's for US citizen with local salary

[md23]

i have read that for IRA's in the USA....your maximum yearly contribution is limited to the amount of salary you are taxed on (excluding the amount exempted for overseas residents). That means for example...that if you make 90K per year, but 80K is exempt...you can contribute a maximum of 10K. is this correct?

also they said that if you contribute more then the maximum, or if your salary is under 80K and therefore no taxable salary, then you would be taxed on the contribution. is this correct?

Pretty much correct. IRA contribution is capped by your compensation, and it does not include the passive types, like dividend, etc. And, if it's not taxable, i.e., the foreign earned income exclusion, you can't include it in your compensation.

[fth]

I have a post elsewhere on brokerage accounts. E*trade in HK can let you open an IRA account here in HK but what you can trade is limited (US and HK stock only).

The difficulty to invest for US expats in HK is well known and hence the earlier silence as serving British, Aussie in fact any other nationality in the world is far easier for the banks and more lucrative. Opening an account in the US without a US address is also a major pain due to local concerns with the Patriot Act.

If anyone is seeing Sarah Palin, please ask her to tell Sen Grassley to shut up and leave expats alone.

Hope this helps.

FTH