Is there a minimum taxable income limit for ROTH IRA?

I am a foreigner with J1 who had a taxable income of $42,000 for 2007 (I just found out it is taxable since I changed to J1 from F1 student visa, which make me ineligible for the tax treaty). My wife, a H1 visa holder, had a taxable income of $2000 in 2007 (she had a non-taxable fellowship when she was a F1 visa holder in most time of 2007). My question here is: Can each of us contributes $4000 separately for 2007 ROTH IRAs ?

Public Comments

1. A Roth IRA is not deductible. You are faced with a large tax bill. December 31 has already passed. From your question, it appears you did not have a business set up in 2007. The only thing you can is set up a "Traditional IRA" by April 15. You could file an extension, hence have until October 15 to set up your IRA. But extensions NEVER postpone your tax liability. Your wife had taxable income of $2000. So the maximum you can set aside to lower your taxes is $2000. Traditional IRA contribution and deduction limit. The contribution limit to your traditional IRA for 2008 will be increased to the smaller of the following amounts: $5,000, or Your taxable compensation for the year. If you were age 50 or older before 2009, the most that can be contributed to your traditional IRA for 2008 will be the smaller of the following amounts: $6,000, or Your taxable compensation for the year. You can convert a traditional IRA to a Roth IRA. The conversion is treated as a rollover, regardless of the conversion method used. Most of the rules for rollovers, described in chapter 1 under Rollover From One IRA Into Another, apply to these rollovers. However, the 1-year waiting period does not apply. www.irs.gov From your question, I gather that neither you nor your wife have an IRA set up at your place of employment. It is best to incorporate or set up a sole proprietorship. Get an Employer Identification Number {EIN}. You will then be able to deduct in whole or in part some expenses that you cannot deduct now. And you could buy a vehicle, equipment, computer system, etc, and take what is called a Section 179 {from the Internal Revenue Code} deduction. Since you thought the income was free from tax, you probably have a whopping tax bill. Please remember that the tax you paid on income you earned abroad can generally be deducted from your present United States income tax liability.
2. Yes, you can -- you have until April 15 to fund either Traditional IRA (which is deductible) or the Roth IRA (which is not). In her case, you are using the spousal IRA provisions to fund hers beyond her 2K in earnings.