Roth Conversion Taxation for non-US-Citizen

[Guest wundermonk]

Hello All:

I am a non-US-Citizen currently living and working fulltime in my home country. I worked in the US from 2006 to December 2009. In December 2009, I converted the money accumulated in my 401K into a Traditional IRA. I then converted this traditional IRA into a ROTH IRA in April 2010.

In the whole of 2010, I lived outside of the US and earned no US income. I also was not the owner of any US-based asset (home or otherwise).

I have two questions:

(1)What, if any, is the % of tax I need to pay for the ROTH Conversion that I did in 2010? I had no other US income in 2010.

(2)I have some carry-forward loss on US stock positions that I held while I was in the US (between 2006 and 2009). All these positions were liquidated when I left the US in December 2009. Can this carry-forward loss by used to reduce my tax burden related to question (1)?

Thank you, in advance, for your time and response.

[mbozek]

Hello All:

I am a non-US-Citizen currently living and working fulltime in my home country. I worked in the US from 2006 to December 2009. In December 2009, I converted the money accumulated in my 401K into a Traditional IRA. I then converted this traditional IRA into a ROTH IRA in April 2010.

In the whole of 2010, I lived outside of the US and earned no US income. I also was not the owner of any US-based asset (home or otherwise).

I have two questions:

(1)What, if any, is the % of tax I need to pay for the ROTH Conversion that I did in 2010? I had no other US income in 2010.

(2)I have some carry-forward loss on US stock positions that I held while I was in the US (between 2006 and 2009). All these positions were liquidated when I left the US in December 2009. Can this carry-forward loss by used to reduce my tax burden related to question (1)?

Thank you, in advance, for your time and response.

First q is are you subject to US income tax. See IRS Pub 901 for tax treaties between US and foreign countries which may exempt you from US income tax. Pub 901 is available free at irs.gov.

If you are subject to US tax then the roth conversion is taxable income and you claim available deductions and exemptions. You can claim up to a $3,000 deduction from a prior year's capital loss against your taxable income. You should consult a tax advisor for provisions applying to non resident taxpayers.