2019 was our 2nd tax year under the Tax Cuts and Jobs Act (TCJA), 3rd year using the Foreign Earned Income Exclusion (FEIE), and 7th year of paying ~$0 in income tax on dividends, interest income, and blog revenue.

But… this year I also realized a massive long-term capital gain which resulted in a massive tax bill.

Our 2019 tax return has some good examples of the FEIE, the long-term benefits of capital gain harvesting, and tax and travel hacking synergies.

Here are all the fun details.

The Go Curry Cracker 2019 Taxes

We had multiple streams of income again this year: interest of both the taxable and tax-free varieties, qualified dividends, non-qualified dividends, long term capital gains, blog earnings, and a ton of Ultimate Rewards points earned by parking some assets in a new brokerage account with JP Morgan.

Ignoring capital gains, income for the year was $104,854. As I’ve shown again and again (and again), at this income level we would pay zero income tax. Blog income of $56,838 generates self-employment taxes of $7,979. (See self-employment tax calculator.)

Including capital gains, total income comes to $206,113. Those gains also come with a tax bill of $10,288. This is a marginal tax rate of 15% and an effective tax rate of 5.0%. Including self-employment taxes, the effective tax rate rises to 8.9%. Including tax paid on international dividends, the effective tax rate comes to 9.5%.

Form 1040

Here are the highlights:

  • Income
    • Taxable interest: $600 for 60,000 Ultimate Rewards points and $79 of interest on minimal cash
    • Tax-exempt interest: $7,680 (~$5k increase over 2018 due to change in asset allocation)
    • Dividends: $39,657 (a ~7% increase over 2018)
    • Capital gain: $101,259
    • Other income: $4,358 of blog income after excluding $52,480 of foreign earned income (Total: $56,838.)
  • Gross Income: $206,113
  • Adjusted Gross Income: $141,621 (Line 8b)
  • Taxable Income: $117,221 (Line 11b)
  • Tax
    • Income tax: $13,643 (Line 12a)
    • Self-employment tax: $7,979 (Line 15)
    • Tax Credits: $3,355 (Line 13b)
      • Child Tax Credit: $2,000 (Line 13a)
      • Foreign Tax Credit: $1,281 (included in line 13b) (this is from taxes withheld on International equity dividends)
      • Credit for child and dependent care expenses: $74 (included in line 13b)
    • Income tax after credits: $10,288 (Line 14)

This is how it all looks on the 1040.

Form 1040 Page 1

Form 1040 Page 2

In the days of old all income and adjustments were on 1 page where it was easy to digest in one glance. Now, business income (Schedule C) and the Foreign Earned Income Exclusion (Form 2555) are reported on Schedule 1, as well as deductions/adjustments for 1/2 of self-employment taxes and self-employed health insurance premiums. These numbers bubble up to lines 7a and 8a, respectively, on the 1040.

Schedule 1 Part 1

Schedule 1 Part 2

A deduction is always nice, but in this case we had to pay $7,979 in Self-Employment taxes to get one. (This could be eliminated through the use of an Overseas Corp, but since we will probably be moving back towards the US I’ve been content to accept a larger future SS income instead.)

Foreign Earned Income Exclusion

100% of income from GoCurryCracker.com is foreign earned income, which can be excluded from taxation. We qualify for the FEIE via the objective Physical Presence Test because we spent 0 days in the US in 2019, and we also probably qualify under the subjective Bonafide Residence test.

To determine the benefit from the FEIE, taxes are calculated first as if we are in the US. Then, the tax that would apply to the excluded income is subtracted from total tax to yield our actual tax due. This is done on the Foreign Earned Income Tax Worksheet, shown below.

Using the Schedule D Tax Worksheet, total tax due is calculated to be $19,552 (Line 4c).

Next, the tax on excluded foreign income is determined from the 2019 tax tables (pdf.) For Married Filing Jointly with taxable income of $52,480 (Line 2c) the total tax due is $5,909 (Line 5.)

Subtracting these numbers yields the actual tax burden of $13,643 (Line 6 and Form 1040 Line 12a)

Foreign Earned Income Tax Worksheet –> Form 1040 Line 12a

$100,000 of Long-Term Capital Gains

In 2019, I sold $353,232.16 worth of VTI (Vanguard Total Stock Market Index ETF) realizing a long-term capital gain of $101,258.69. This started as a massive capital gain harvest but ended as a shift in our asset allocation.

Schedule D Form 8949 Long-term transactions

$90,951 of this sale was taxed at 15% for a tax burden of $13,643 (100% of our 2019 tax burden.).

All of the individual shares sold were purchased in late 2014 and late 2015 as part of previous capital gain harvests that increased our basis in these shares by $114,659.

Without those previous capital gain harvests, these transactions would have realized a gain of $215,918 resulting in an additional $17,199 tax due.

Capital gain harvesting works wonders.

Want to know more? Plug your email address in here and I’ll send you our capital gain harvesting template with the actual transactions from a harvest I made in 2016.

Taxation of Award Points

If you earn award points through credit card usage or signup bonuses, the IRS just treats these points as a refund on your purchases. There is no income and therefore no taxes. (See our Award Travel Series on Transferrable Currencies.)

Not so when earned in other ways, such as through referrals or bonuses for depositing funds in a bank or brokerage account. I did this in late 2018, depositing $75,000 into a new You Invest by JP Morgan account to get 60,000 Ultimate Rewards points. (As part of 2018’s cap gain harvesting – just move cash to the new account.)

This was shown on the bank 1099 as non-cash rewards of $600.00.

These points were converted into $900 of airfare for flights to Bali, Indonesia in August 2019.

This “income” pushed $600 of long-term capital gains into the 15% tax bracket, so those flights actually cost $90 in taxes.

Tax Payments for Award Points

Throughout 2019 I made quarterly estimated tax payments of $10,825 (Form 1040, Line 19.) When filing 2019 taxes, I also owe an additional $7,442 (Form 1040, Line 23.) This is all due by July 15th, 2020.

100% of this $18,267 in tax payments have been / will be made with credit cards, as I apply for at least 1 new card per quarter. We have 3 cards ready to go for the coming $7,442 in payments (United Explorer card, IHG Premier card, and Alaska Airlines card.) (See the full details on how and why to do this.)

Making tax payments requires a fee of 1.87%, so on $18,267 I will pay fees of $341.59. Thanks to the welcome bonuses that generates over $3,500 in travel value with $0 in tax. I’ll gladly pay $1 to get $10 in return. (Someday, when we can travel again.)


In 2019 we paid zero income tax on dividends, interest income, and blog revenue. This is due to the generous 0% tax brackets for qualified dividends and the Foreign Earned Income Exclusion on blog income (but $7,979 in self-employment taxes.)

However, a massive capital gain resulted in a massive tax bill (actually $10,288 after tax credits.) This started as a supersized capital gain harvest to minimize taxes when we move into a “high-tax” State, but ended as a shift in asset allocation. This also marks a shift in attitude from “never pay taxes again” to “lifetime tax minimization” – we could have paid $0 in income tax again this year but chose to pay some taxes now vs more taxes later.

Some of the main takeaways include:

  • substantial tax benefits of being physically outside the United States (saved more than $5,000 in taxes.)
  • long-term benefits of annual capital gain harvests (this year’s tax bill was reduced by more than $17,000.)
  • financial benefits of travel hacking even when taxed ($900 in flights for $90 in taxes.)
  • HUGE travel benefits for using credit cards for tax payments ($3,500+ value for $350 in fees.)

Overall it was another good year, with small tax burden for a high quality of life.

Until next year…