Contributing to a Roth IRA while income tax filing status is “Married Filing Separately”?
You must file as married for 2013 if you were married as of December 31, 2013. It is true that the Roth IRA contribution phaseout for Married Filing Separately is 0 - $10K. But you can still do backdoor Roth IRA contribution (contribute to a Traditional IRA, then convert it to a Roth IRA; assuming you do not have any pre-tax IRAs, this is identical to a Roth IRA contribution). But you already made a Roth IRA contribution for 2013, and did not do the backdoor. Let's assume that you want to turn it into a backdoor Roth IRA contribution, and that you don't have any pre-tax IRAs. There are two ways to do this: Withdraw the Roth IRA you contributed (including earnings). Then, do a normal backdoor Roth IRA contribution (contribute to a Traditional IRA, then immediately convert it to Roth IRA). The earnings you had in the Roth IRA that you withdrew will be treated as normal income and taxed. The conversion will not be taxable because all of the Traditional IRA was non-deductible when you converted. Re-characterize your original Roth IRA contribution as a Traditional IRA contribution, then convert it to Roth IRA. It will be treated as if you made a Traditional IRA contribution originally, and then waited until now to convert. The earnings in the IRA up till now will be taxed on conversion. So in both cases, you will need to pay income tax on the earnings in the account up to now. The difference between the two is in the amount of money in the IRA now. With the first way, you can only contribute $5500 now. With the second way, you will keep the same amount of money you have in the IRA now.
"Congratulations on getting married!  As far as the IRS is concerned, you are a married couple for all of this year for tax purposes. The 2014 HSA contribution limit for you and your husband together is $6550.  This limit applies to both of you together, whether you file jointly or separately.  So it looks like you and your husband have excess contributions this year.  You'll need to withdraw some contributions, either in your account or your husband's account, to get under $6550 total for the year. If you choose to take this money out of your account, since you have already spent this money out of your HSA, you won't actually receive a check from the withdrawal.  Instead, the money that you have already spent will be recategorized from a normal HSA medical distribution to an excess contribution withdrawal.  When you get your 1099-SA form from your HSA bank at tax time, the distributions will be coded as excess contributions distributions.  In addition, the form will include the amount of any earnings (interest) that you received on your excess contributions. At tax time, you'll need to examine your W-2 form from your employer closely.  If the form does not include the amount that the employer HSA contribution in your taxable income, you'll need to add this amount as ""Other income"" on your taxes.  You'll also need to include any earnings on the excess contributions reported on the 1099-SA. Since your husband funds his own HSA and doesn't have any employer contributions to it, you might find it easier to withdraw the excess contributions from his HSA instead of yours.  To do this, you need to tell his HSA bank that the withdrawal is an excess contribution withdrawal so that it gets reported correctly on his 1099-SA.  There won't be any changes to his W-2, and the only ""other income"" he'll need to report is any earnings on the excess contributions from his 1099-SA. The instructions for Form 8889, line 13 explain what to do in the event of an excess contribution (note: The text here is from the 2013 version of the instructions): Line 13 If you or someone on your behalf (or your employer) contributed more to your HSA than is allowable, you may have to pay an additional tax on the excess contributions. Figure the excess contributions using the following instructions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the additional tax. Excess Contributions You Make To figure your excess contributions (including those made on your behalf), subtract your deductible contributions (line 13) from your actual contributions (line 2). However, you can withdraw some or all of your excess contributions for 2013 and they will be treated as if they had not been contributed if: You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the Note under Excess Employer Contributions, later), You do not claim a deduction for the amount of the withdrawn contributions, and You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. Excess Employer Contributions Excess employer contributions are the excess, if any, of your employer's contributions over your limitation on line 8. If you made a qualified HSA funding distribution (line 10) during the tax year, reduce your limitation (line 8) by that distribution before you determine whether you have excess employer contributions. If the excess was not included in income on Form W-2, you must report it as “Other income” on your tax return. However, you can withdraw some or all of the excess employer contributions for 2013 and they will be treated as if they had not been contributed if: You make the withdrawal by the due date, including extensions, of your 2013 tax return (but see the following Note), You do not claim an exclusion from income for the amount of the withdrawn contributions, and You also withdraw any income earned on the withdrawn contributions and include the earnings in “Other income” on your tax return for the year you withdraw the contributions and earnings. There are further instructions on what to do if you don't take care of this until a future year, but it is much better and easier if you take care of this before the end of this year, and handle it correctly on your tax return. I believe that this is how it will all work; however, you'll want to confirm all of this with someone who knows what they are talking about and can look at your individual situation.  Hopefully, this answer gives you enough information to be able to ask the right questions." With a Roth IRA, you can withdraw the contributions at any time without penalty as long as you don't withdraw the earnings/interest. There are some circumstances where you can withdraw the earnings such as disability (and maybe first home). Also, the Roth IRA doesn't need to go through your employer and I wouldn't do it through your employer. I have mine setup through Fidelity though I'm not sure if they have any guaranteed 3% return unless it was a CD. All of mine is in stocks. Your wife could also setup a Roth IRA so over 2 years, you could contribute $20,000. If I was you, I would just max out any 403-b matches (which you surely are at 25% of gross income) and then save my down payment money in a normal money market/savings account. You are doing good contributing almost 25% to the 403-b. There are also some income limitations on Roth IRAs. I believe for a married couple, it is $160k. "First, filing status. If you and your wife are legally married, you should be filing your tax returns as married, either jointly or separately. In the US, ""head of household"" has a specific meaning and is for unmarried people who are supporting one or more relatives, per the IRS. If you are working full-time and your wife is not, then likely you will file a joint return, including all your income and all the expenses for your wife's business. So yes, the losses in her business will offset your income. Depending on how complex things are, you may want to hire a professional to help with your taxes. The rules for what can and cannot be deducted as a business expense can be opaque." "If I understand correctly, the Traditional IRA, if you have 401k with an employer already, has the following features: Actually, #1 and #2 are characteristics of Roth IRAs, not Traditional IRAs. Only #3 is a characteristic of a Traditional IRA. Whether you have a 401(k) with your employer or not makes absolutely no difference in how your IRAs are taxed for the vast majority of people. (The rules for IRAs are different if you have a very high income, though). You're allowed to have and contribute to both kinds of accounts. (In fact, I personally have both). Traditional IRAs are tax deferred (not tax-free as people sometimes mistakenly call them - they're very different), meaning that you don't have to pay taxes on the contributions or profits you make inside the account (e.g. from dividends, interest, profits from stock you sell, etc.). Rather, you pay taxes on any money you withdraw. For Roth IRAs, the contributions are taxed, but you never have to pay taxes on the money inside the account again. That means that any money you get over and above the contributions (e.g. through interest, trading profits, dividends, etc.) are genuinely tax-free. Also, if you leave any of the money to people, they don't have to pay any taxes, either. Important point: There are no tax-free retirement accounts in the U.S. The distinction between different kinds of IRAs basically boils down to ""pay now or pay later."" Many people make expensive mistakes in their retirement strategy by not understanding that point. Please note that this applies equally to Traditional and Roth 401(k)s as well. You can have Roth 401(k)s and Traditional 401(k)s just like you can have Roth IRAs and Traditional IRAs. The same terminology and logic applies to both kinds of accounts. As far as I know, there aren't major differences tax-wise between them, with two exceptions - you're allowed to contribute more money to a 401(k) per year, and you're allowed to have a 401(k) even if you have a high income. (By way of contrast, people with very high incomes generally aren't allowed to open IRAs). A primary advantage of a Traditional IRA is that you can (in theory, at least) afford to contribute more money to it due to the tax break you're getting. Also, you can defer taxes on any profits you make (e.g. through dividends or selling stock at a profit), so you can grow your money faster." "I am looking at a 1040A. Line 11a asks for total IRA distributions. 11b asks for the taxable amount. Enter ""QCD"" as explanation and remove the Qualified Charitable Deduction amount from 11a to get 11b which is added to your income if there's any positive balance." Your wife doesn't need to file a 2014 tax return because she's a nonresident and she didn't have any U.S. income. Her visa is irrelevant; it only matters what her status was (if she was in the U.S., but she wasn't) and if she had U.S. income. Your child doesn't need to file a tax return because she didn't have any income. There's a certain income threshold below which she doesn't have to file. Children generally never file their own tax returns. I don't know who told you otherwise. You may have to file if you had income (maybe including fellowship income and stuff like that) in the U.S. during the year? Did you? If you didn't then you probably don't need to file a tax return. Also, you said you're nonresident for the year. Are you sure about that? Students are generally nonresident for the first 5 calendar years, and resident thereafter. So if you came in 2009 or before, you would be resident for all of 2014; but if you came in 2010 or after, you would be nonresident for all of 2014. If you were in the first 5 calendar years of being a student, you also need to file Form 8843 regardless of whether you need to file a tax return. Nonresidents generally can't claim dependents. Residents can, however. A dependent will provide you with an exemption (it reduces your taxable income by a certain amount). You can also get the Child Tax Credit if your income is low enough. There is a U.S.-Sweden tax treaty. It has a section covering students. It may exempt some or all of your income from U.S. tax. Most universities provide free international tax programs for their international students and scholars. You should look to see if your school offers this. Don't go to outside tax filing places because those generally don't know anything about how to file for nonresidents. "If you're single, the only solution I'm aware of, assuming you are truly getting a 1099-misc and not a W-2 (and don't have a W-2 option available, like TAing), is to save in a nondeductible account for now. Then, when you later do have a job, use that nondeductible account (in part) to fund your retirement accounts.  Particularly the first few years (if you're a ""young"" grad student in particular), you'll probably be low enough on the income side that you can fit this in - in particular if you've got a 401k or 403b plan at work; make your from-salary contributions there, and make deductible IRA or Roth IRA contributions from your in-school savings. If you're not single, or even if you are single but have a child, you have a few other options. Spouses who don't have earned income, but have a spouse who does, can set up a Spousal IRA.  You can then, combined, save up to your spouse's total earned income (or the usual per-person maximums).  So if you are married and your wife/husband works, you can essentially count his/her earned income towards your earned income. Second, if you have a child, consider setting up a 529 plan for them.  You're probably going to want to do this anyway, right?  You can even do this for a niece or nephew, if you're feeling generous." Just from my own experience (I am not an accountant): In addition to counting as 'business income' (1040 line 12 [1]) your $3000 (or whatever) will be subject to ~15% self-employment tax, on Schedule SE.  This carries to your 1040 line ~57, which is after all your 'adjustments to income', exemptions, and deductions - so, those don't reduce it.  Half of the 15% is deductible on line ~27, if you have enough taxable income for it to matter; but, in any case, you will owe at least 1/2 of the 15%, on top of your regular income tax. Your husband could deduct this payment as a business expense on Schedule C; but, if (AIUI) he will have a loss already, he'll get no benefit from this in the current year.   If you do count this as income to you, it will be FICA income; so, it will be credited to your Social Security account. Things outside my experience that might bear looking into:  I suspect the IRS has criteria to determine whether spousal payments are legit, or just gaming the tax system.  Even if your husband can't 'use' the loss this year, he may be able to apply it in the future, when/if he has net business income. [1] NB: Any tax form line numbers are as of the last I looked - they may be off by one or two.