Another year, another tax return.
For the 4th year in a row, we’ve had taxable income in the six figures range with income tax burdens of ~zero, or even negative. Uncle Sam is by far my most generous relative.
This year is much the same, although I decided to throw the IRS a token dollar.
Gross Income & Adjustments
Income came in many forms: interest of both the taxable and tax-free varieties, dividends, capital gains, and blog earnings. Multiple streams of income…
This is how it all looks on the 1040
Interest (Line 8a): $4,842
Tax-free Municipal Bond Interest (Line 8b): $1,151
Qualified Dividends (Line 9b): $29,829
Non-qualified Dividends (Included on Line 9a): $4,370
Blog profit (Line 12): $28,271
Capital gain harvest (Line 13): $28,113
Roth IRA conversion (Lines 15,16): $6,229
Total income (Line 22): $101,519
Some noteworthy things this year:
The dividend payout on VTI was up 7.4% over last year, but our total dividend income was DOWN 7%. That was intentional.
Total blog income was $34,916 with $6,645 in expenses and deductions. I could have made deductible employer solo 401k contributions (but didn’t) and fully expensed new business assets (camera, lens, and phone), but chose to shift those expenses into the future when I expect our marginal tax rate to be higher. Had I used these deductions now, I could have reduced business income by an additional $8,471. I also could have made deductible employee solo 401k contributions of up to $18,000, but chose to make Roth contributions.
Related: I reviewed the blog’s Schedule C in another post.
Adjustments, Deductions, and Credits
We have only two adjustments to gross income this year.
Deductible part of self-employment tax (Line 27): -$1,983
Self-employed health insurance deduction (Line 29): -$600 (Taiwan national health system for W & Jr)
This means I paid $3,965 in employment taxes on blog income (Line 57.) Going forward, this could be eliminated by operating through an overseas corp. Still, the potential ROI on these additional social security contributions is not too bad.
—
For deductions, we use only the standard deduction and personal exemptions. In 2016, the standard deduction is $12,600 for a married couple filing jointly (MFJ) and our family has 3 personal exemptions (3 * $4,050.) Combined this provides us with $24,750 in tax free income.
Standard deduction (Line 40): $12,600
Personal exemptions (Line 42): $12,150
—
We have 3 credits that reduce tax burden this year worth $1,622.
Foreign Tax Credit (from VXUS) (Line 48): -$580
Childcare Tax Credit (Line 49): -$49
Child Tax Credit (Line 52): -$1,000
Tax
With $1,622 worth of credits available to offset our tax burden, I went looking through the tax tables for this exact number. The closest I could find was $1,623. With that knowledge, I tuned blog income to exactly the right value to provide this tax burden via the Qualified Dividends and Capital Gain Tax Worksheet. I could have subtracted another $50 in income but it would have only saved me $1 (a 2% tax rate) so I opted to pay $1 in income tax this year. It’s sad, I know.
Tax Forms
Here are the full tax forms as produced by Turbo Tax (click for a slightly larger version of each.)
Form 1040 Page 1
Form 1040 Page 2
Qualified Dividends and Capital Gain Tax Worksheet
Not shown on the 1040:
– we contributed $5,500 each to two Roth IRAs
– I contributed $18,000 to my Individual Roth 401k
– Jr made a $300 contribution to his Roth IRA
Closing Thoughts
So yeah, we paid $1 in income tax this year. Although I would have rather paid $0, it is important to let the math decide rather than ideology. I’m still ahead by $4 since last year the IRS paid us $5.
Due to making quarterly estimated tax payments this year we are due a refund of $798. I could use that to offset my Q1 estimated tax payment for 2017, but I’ll take it as cash and instead make the ES payment on a new credit card. It brings me great joy when Uncle Sam buys us plane tickets to exotic locales, such as Paris.
Sprinkled amongst these numbers and forms are examples of the core recipe to tax free living for early retirees; Roth conversions, capital gain harvesting, and living well for less. It’s what has helped us keep a zero/low tax burden for 4 years running. Hopefully by sharing we can help you do the same.
Haven’t done your taxes yet? Use this link to get 20% off TurboTax.
Very nice! I always enjoy these posts because they go into so much detail. Very inspiring, and thanks for sharing.
While my taxes were much lower this year, I didn’t manage $0 (sadly). Maybe next year! :)
Hi,
I’m not that familiar with US taxes, but still… how?
Can you please explain it in a little more details?
I see that you still have $74k of taxable income. How come it goes down to $1 tax or even $1.6k tax?
Sure. Check out the theory post, Never Pay Taxes Again. This tax return was very similar to last year’s, so I mostly highlighted deltas this time, but the explanation on the 2015 tax return is very detailed. If you have any Qs after reading those, let me know.
Are single people pretty much SOL? I mean we can only have 37,650 and only $10,350 in standard/personal exemption. I plan on having mostly dividend income, however, some will be seller financed mortgage and rental income. I really need to get married I guess to be able to pay 0.
For single filers, you divide all the numbers by 2. But you also spend less.
Same question. Also how about Social security taxes/ self employment tax. How much was that?
Line 57
Thanks for the detailed post! I always look forward to your post about taxes. Great job yet again!
#MAGA
We had a much lower AGI since we’re managing our AGI to qualify for subsidies and other AGI-based freebies. But the self employment tax hit us in roughly the same way. Ended up paying nearly zero too after the child tax credits (x3 for us) kicked in. Overall we managed to pay just $2300, equally split between state and federal taxes. Not bad at all.
No sir, not bad at all
You said in your article that you tuned your blog income to match your tax credits.
Wouldn’t you be better off subtracting all the expenses you can to reduce self-employment taxes? Unless you just meant you held of some purchases.
I would like to see a review of your Schedule C.
Also, what did you pay Jr. for in 2016 and did he have to file his own tax forms?
Look at my post on depreciation, specifically the section on time shifting deductions for maximum tax benefit. If I expensed everything this year it would indeed reduce SE tax, but would at best buy me 10% on income tax. Next year I expect to be at a 15% or 25% marginal income tax rate, so I’d rather use the deductions then. I’ll get the same reduction in SE taxes either way, just a difference of when.
I paid Jr for allowing me to use his photos on the blog. He doesn’t have to file his own tax return until total income exceeds his standard deduction (6k +/-)
Jeremy,
You may want to check out the IRA kids website- Its a little dated but still applies. The question is whether Jr has more than $400 in self employment income-(non W2). They have examples for filling out taxes when kids earn over $400 in self employment income.
http://irakids.com/index.php?section=home&content=paying_taxes
“The earned income for the Roth IRA can be either wages (from working for an employer who withholds taxes and issues a W-2 form or self-employment income. If the income is less than the standard deduction (greater of $950 or $300 plus the kid’s earned income, up to $5,700 in 2010), a kid would not pay any income tax.
However, if a kid has more than $400 in self-employment income (not W-2 income), he or she will have an obligation to pay self-employment taxes, which are about 15% of self-employment income, and are in addition to income tax. (Self-employment taxes are Social Security and Medicare taxes.)
So kids could have no income tax to pay if they fall under the standard deduction, but they still may have self-employment tax to pay.”
Yeah, that is all true.
Jr isn’t self-employed.
Did you issue a 1099 for Jr? This is required if you paid $600 or more to an independent contractor.
Just because a person receives a 1099 it doesn’t necessarily mean the person is SE. The IRS gives some factors to consider to determine if an activity is considered a trade or business or simply a hobby.
The instructions to the recipient of a 1099 state that box 7 income (non-employee) can be reported on 1040 line 21 (no subject for SE) for sporadic or hobby income. Jr could very well fall into this category.
In this case Jr would not be required to file a return.
I only paid him $300 this year, so no 1099 and no W2. I intentionally kept it below $600 (1099 requirement) and $400 (SE tax requirement) just for simplicity. I’ll ramp it up over time as he becomes a more active contributor.
IRS publication 902 mentions it under Other Filing Requirements Section(after example 3)
https://www.irs.gov/publications/p929/ar02.html
“Other Filing Requirements
Some dependents may have to file a tax return even if their income is less than the amount that would normally require them to file a return.
A dependent must file a tax return if he or she owes any other taxes, such as:
Social security and Medicare taxes on tips not reported to his or her employer or on wages received from an employer who didn’t withhold these taxes….
A dependent must also file a tax return if he or she:
Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or
Had net earnings from self-employment of at least $400.”
Hope this helps.
Michael
Since I don’t have a business my young kids are limited to self employment income- they generally claim $300-400 a year for doing yard work at neighbors- I have them write down hours using a spreadsheet and have the neighbor sign it as proof. I also opened up a savings account and had the amount deposited there so there is record. I match what they earn to a roth IRA and every year we review with them so they can see what the market earned them. It has been a great teaching tool to get them learning about finance.
Awesome!
It appears to me, based on your Adjusted Gross Income or Taxable Income you already are in the 15% tax bracket. Am I missing something?
See the Qualified Dividend and Capital Gain Tax worksheet, which is the last form in this post.
Line 10 shows the amount that is subject to normal income tax. In this case it is $16,249, which is firmly in the 10% tax bracket.
Oh America, the land where earned income is taxed much higher than unearned income :) Great job as always.
Follow the incentives :)
Any tips for DINKS? I had to pay a little over $3000 for Federal. Not self employed, I max out my 401k, wife contributes to her 401k, have two Roth IRAs we max out, have taxable investments with vanguard. Any pointers would be appreciated!
When you are an employee, there isn’t much you can do that you aren’t already doing.
That’s so awesome that you post your numbers, so we can go through the tax return and see how it is done.
The best part is that you also managed to essentially place your whole blog income into Roths.
On a side note, how easy would it be for you to also be covered by the Taiwan health system as a spouse of a citizen? Is it worth the trouble?
I can enroll in the system once I’ve been in Taiwan for 6 months consecutively. So far that has never happened.
so weird story… turns out I just hit 6 months in Taiwan and was auto-enrolled in the health system. Today we spent most of the day at a government office getting my health card and then suspending my insurance since we are leaving the country. The good news is that I had a dentist appointment tonight that only cost $5 instead of the $30-$50 I would have otherwise had to pay.
Hi GCC,
That is interesting to learn. Those appointments were pretty cheap – I pay a little more than $30 – $50 per visit with insurance.
But I was asking more from a visa/permanent residency point of view. I spend some part of my time thinking about retirement visas.
Have safe travels GCC & Family!
I have permanent residency in Taiwan, through marriage.
Dental care in Taiwan is really inexpensive.
When do you do you a Roth IRA conversion? Can you do it now for 2016? or did you do it in December 2016?
It has to be done in the tax year, so before 12/31/16 in this case.
You can do a conversion at any time during the year, and even reverse it later (in whole or part) if it is beneficial to do so.
I like when something finance related stops being (primarily) finance and starts being an engineering problem. Nice work!
Indeed. I really don’t care that much about our actual tax rate, but I enjoy the system optimization :)
I would be interested in a post on your schedule C! It’ll be a reference for when I eventually get there :)
OK
“I’ll review the blog Schedule C in a future post if there is interest.”
Yes, please! ?
Maybe I’m missing something but doesn’t it say you owe $3965 in self-employment tax that is being offset by your estimated payments of $4764? It seems that you are paying $3965 in addition to the $1 in taxes.
It does say that. And I said it too
“Line 63 – Your total tax is $3,965”. I’m too not following why you are saying that you only paid $1 in taxes on a “six-figure range income”. If you are not counting $3,965 as taxes for some reason then OK, but then you also don’t have a six-figure income, since the business income on line 12 ($28,271), which is taxed at $3,965, should be subtracted from the total sig-figure income on line 22 ($101,519).
I love what you are doing here and plan on using many of the same strategies when I no longer have earned income but I seem to not understand the logic behind this one statement. So this is not an “attack” but a simple curiosity.
$1 in income tax.
Right, so you paid $1 in income tax on $73,248 of income and you paid $3,965 in self-employment tax on $28,271 of self-employment income. Total tax paid in 2016 – $3,966 on that six-figure income of $101,519.
I think what matters is how much tax I pay to the Feds – I don’t care if it’s on earned income or self-employment. Otherwise, If I had a business that generated 100K per year and, for simplicity sake, lets say I paid 20K in self-employment taxes for a year, would I say that I paid zero in federal taxes?
That’s what I said.
It sounds like you take exception with the popular language, IRS definitions, and CBO reporting. I fully support you in your efforts to change the public discourse. Good luck.
SE taxes are ultimately a contribution to our annuity, disability insurance, and health insurance. They are an expense that we will be paid back 100%.
If you really want to be pedantic about the whole thing, are harvested capital gains or Roth IRA conversions income?
The only thing I take exception with is the illusion of “I paid $1 tax on a six-figure income” while in reality it’s more like 4K in taxes. Income/SE – a tax is a tax. BTW, paying 4K in taxes on a six-figure income is absolutely fantastic so either way you’re obviously way ahead of the game. Thank you for sharing your returns and your replies to each comment. There is a lot to learn here.
income tax
I know that you live in Taiwan but I don’t recall whether you have to be resident of any US state. Do you?
I will owe taxes this year (the cost of my learning curve) but I haven’t made any estimated payments. What’s the benefit of paying early?
I may file an extension and incur some interest and fines but I am waiting to sell some stock after I’ve had it for one year, seems the math will work (about 3,5% of interest and fees versus at least 10% less income tax) or I may have to pay again for the lesson. An alternative is to get another credit card and put the taxes on it (I recall there is a service to pay taxes for a 2.7% fee which will be less of what I googled the fines and fees would be). Still undecided and running out of time.
We are technically residents of WA State, which has no income tax.
Your tax is due on April 18th, even if you file an extension. You should make a payment if you believe you will owe, else you will face fines.
I’m required to make estimated payments now, non-optional.
Credit card fees can be as low at 1.87%. Often worth it to meet a minimum spend and bonus points. Not really worth it to get “regular” points.
yep. I think I will pay cash before the deadline. I got the Chase CSR and Business Ink cards and was thinking about getting another one to put the taxes on, but Chase ding me for a third-in-a-row card and I could not find anything else with a similar signup bonus.
The ROI is much greater when there is a signup bonus, but I’ll still go for regular points without the signup bonus. Ultimate Rewards points or Starwood points are worth more than 2 cents each, or just use a 2% cash back card.
“Childcare Tax Credit (Line 49): -$49”
How in the world did you pull that off? Leave GCCJr with some random company once? Seems like a very small amount for someone who would provide you a TIN.
The credit is 20% of what we paid, to a few different solo care providers in Taiwan. There is no need to provide a TIN for overseas providers (since they don’t have one.)
Heavens – I don’t think I’ve ever appreciated the Australian tax system more. No wonder Americans seem to either fear or get extreme satisfaction out of doing their taxes. Those are headache inducingly complicated forms!
The US system is needlessly complex. It is more of a social engineering program than a tax system
Kate…it’s much worse than it appears.
He’s only showing you a couple of key forms that summarize his taxes vs the 150+ pages of forms and calculation sheets used to generate the numbers on those couple of key forms.
GCC….well done! And very clearly explained.
Also: add my vote for a Schedule C post.
Thanks for all you do on the website!
Actually more like 90 pages, I just remembered GCC is taxed in Washington State, so he doesn’t have another 60 pages of state return like we do here in CA.
I’ve signed up to get an email when you post new posts. I don’t think it’s working?
Check your spam folder. You also need to click on the Join Team Curry Cracker button in the first email
Wowza, bravo on that low tax burden! We owed $900 to the IRS this year, which sucked. We’ve been looking for ways to keep our taxes more reasonable; I’ll throw your ideas past Mr. Picky Pincher so we can get a game plan. :)
More interest here for Schedule C detailing, please!
My low effort small biz (less than part-time – keeps me out of trouble) is now essentially a NFP – that is, I zero-out income after funding a solo 401k. With my wife now soft-retired (playing around a day or two/wk for fun), the game is keeping MAGI under the medicaid expansion bar (while it still exists). Last piece is to start converting IRAs to Roths. And pay those property taxes w/ two reward CCs/yr.
Alright, I’ll do that shortly. Now to just get it done while we are traveling…
I expect to remain jealous for 5 more years as I read your tax posts. :-) I did my taxes tonight: we paid ~$22k after coming reasonably close to maximizing contributions and deductions available to us. “Earned income” indeed!
The good news is 5 years goes by really fast and you are making bank! Congrats!
I’m paying about $4,000 in SE tax. Mrs. RB40 is still working so our total tax comes out to be around $7,500. I will look into paying Jr this year. Seems like a good way to start his retirement account. How much did you pay GCCJr in 2016? Is it per photo? I see that he contributed $300 to his Roth IRA.
I just paid him $300, so he contributed 100% of that to the Roth. I didn’t it more as a services fee.
Early retirees with a reasonable amount coming in (for 2016 my wife’s early SS and Pension, both of which had federal taxes taken out upfront, and dividends/capital gains). Next year will also have my early SS thrown in for good measure. The bottom line tax we paid for 2016 was $650, which was the amount taken out in federal taxes minus what I was able to get back on our filed return. Wish I had credits but the daughter is long gone from under our roof, and I only had about $54 on the foreign tax credit line. Flip side is we don’t have the cost of a child, but that credit …
I’d take a $650 tax bill any day. Very nice.
FY 2015-16: Paid $A 24,030.70 (all company tax), received $A 28,949.00 tax refunds (personal dividend franking credits). Fees & levies ~$A 600. Pensions: no tax. Property ~$A2,000.
Is this a negative tax rate?
0% overall. Less franking credits added to account at Australian Taxation Office as a result of company paying tax (30%) than subtracted due to company paying dividends. Personal tax rate might be seen as -30% due to receipt of tax credits in cash. [Slightly more complicated than stated due to contributions to superannuation (pre-pensions).]
Long time listener, first time caller…
Impressed as always by your tax acumen – thanks for sharing your numbers and rationale.
May I ask how you decided on the pay scale for GCC Jr’s modeling in order to contribute to his Roth early on?
This is a maneuver I’ve seen both you and the White Coat Investor mention and would love to consider for my kids as well. Can use Lake Woebegone assumption that all our kids are above average (looking)…
Have you seen the post I wrote about hiring your kids? For this year I just targeted a low amount that would be below any filing thresholds ($600 for 1099, $400 for SE taxes.)
Another great post, but these tax updates always make me want to puke. :( I just got my taxes done and I owe almost $2000 for a total tax burden of $15,600 in 2016. Are you doing tax consulting / prep work for hire yet??
Seriously… Is there any hope for someone still working a W-2 job and earning a 6-figure income? We already have rental properties so we’re able to write off quite a bit there along with depreciation. But, until I’m able to “retire” from Corporate America, it just feels like I’m screwed when it comes to taxes.
Still amazed at how this is possible with a tax system of western country. Deep bow to you sir for finding our a way to limit your taxes so much. Pretty impressive.
There is NO way that would even work for us, the tax code here in the Netherlands has very little to no options of legally making something like this work. Which makes trying to FI in this country so much harder than in the US. Ah well, such is life.
We’ll be in Amsterdam just after King’s Day. If you happen to be in the neighborhood we would be happy to meet up for an over-taxed coffee. Drop me an email.
Thanks for sharing your details. Why don’t you contribute the 25% profit sharing match allowed, pre-tax, for a solo 401k?
My tax rate is 0%. The employer contributions would go in at 0% tax rate and come out at (most likely) something higher.
I think if you filed as an S Corp, you could deduct that amount and save on FICA taxes though. If sole, I don’t think you can do this. Question about social security. Does your wife have enough income to qualify for benefits? If not, you can always make her a blog employee. I have a friend who’s wife is on his payroll, does admin work, for this very purpose. Also, her ROI on social security benefits, assuming she’s made less than 350k over 35 years, is likely higher than your ROI on additional FICA taxes. Thanks again.
re: spousal SS. Winnie never worked in the US, so she has zero credits. But she qualifies for spousal benefits, which is equal to half of my benefit. So unless she makes some serious income then all of her SS taxes would just be a donation. There are other benefits to her being an employee of GCC Inc though, such as her being able to contribute to the company 401k.
Blog income needs to double or triple before an S-corp becomes interesting. In that case, profit sharing contributions (limited to 25% of “salary”) are a deductible business expense. There are downsides as well, some of which we briefly touched on before.
If none paying tax in this country, I am just wondering how the system would work.
Sorry, no complaints allowed unless you first list all of the ways in which you choose to pay extra taxes.
???
#envy
I had to pay in an extra $4k this year and my total tax burden was about $38k! That’s with what I thought were a lot of deductions. Of course, when your active earned income is high – you get nailed hard. We’re positioning well though for a future that looks a bit more like yours. Thanks so much for sharing all this detail, really interesting for all us financial voyeurs.
Quick question… if you paid $4764 in estimated payments and are getting a refund of $798, didn’t you pay a total of $3966 in taxes….
Thanks for showing your informative tax return.
As I said.
the SE taxes will be returned to us in full.
Go Curry Cracker –
Nice job! Love the detail and the way you have gone into the tax code. Looks like you are making a few changes, then, in 2017, eh? Such as the self-employed retirement accounts? Would love to see a post on how you set that up! Awesome work.
-Lanny
2017 will be the 3rd year of solo 401k usage. I’ll add a post about that to my list
Me too, as I’m in the middle of learning all I can about Solo 401k accounts since I’m self employed and would love to lower my tax burden. And if I can convert the pre-tax dollars in the s401k into a Roth and then withdraw tax free in 5 years all the better.
Please do a Solo 401k post and how it fits in with the Roth component and not paying any taxes.
My AGI is about the same as your but end up paying $6K+ tax, all because–as you know it, big chunk of it came from Line 7(wage, salaries…etc). Sigh….
Yeah, unfortunately with wage income there is not much that can be done beyond contributing to deductible 401k / IRA / HSA. Still, 6% +/- is not a bad effective tax rate.
From the comments we can see that stating you paid $6k in (income) tax, while accurate, is not without its detractors. So in addition, I suppose we must say that you also paid payroll taxes / FICA of about $9k (doesn’t appear on your 1040.) And your employer also paid about $9k in payroll taxes on your behalf (doesn’t appear on your W2 or 1040.)
Looking forward to it!
I’m a bit confused. Your line 43 taxable income is $74,186. The tax table says your tax on that (the amount of line 43) is $10,199 for married filing jointly? Where do you get the $1623 from?
forget it I see – capital gains and qualified dividends aren’t taxes.
My wife is a public school teacher and I work from home as a reseller selling on Amazon and have about a zillion questions. Can I email you or would you prefer I ask questions here? I don’t want to go off topic from this post. Was doing taxes and ran across your site. Nothing specific to my return, just want to chat basically.
feel free to ask questions in the comments, Ken. That way the whole GCC community can try to help.
Is there ever a way to harvest gains/losses while still working or is that best done once retired and income is much lower?
What interest are you getting on your portfolio? Almost $30k in dividends is huge! I remember reading you no longer do individual stocks. If I could save tons of time by not researching so much about individual stocks while still earning a similar 3.5-4% yield I’d switch in a heartbeat.
As long as you are in in the 15% tax bracket, you have the potential. State taxes and loss of AGI based credits may apply.
Yield on VTI is ~2%. Total return is more important than yield.
That’s what I thought too, and all the research told me that too. Our AGI is $67k (MFJ) and any amount I enter under the capital gains section increases taxes owed. I already filed, but I was trying out a hypothetical scenario. TaxAct did correctly calculate our $0 tax on QDs. Even if I removed the QDs it was still increasing our tax for capital gains on any amount. I’m probably doing something wrong.
I’m a DivGro investor now so I tend to chase yield a bit, but it’s sucking up way too much time and I’d like to liquidate all stocks and buy some low maintenance vehicles instead. Need to research more, thanks for the link. I’m slowly reading through all archived articles.
The gains have to be long term. Short term gains are taxed like regular income, long term are taxed at 0%.
I had the hypothetical sale several years old to make sure it was over a year. No idea why it’s not working.
There’s a worksheet for the 1040 that calculates the tax amount in line 44 if you have QD & LTCG. I’ve not used Tax Act but you should be able to pull up the worksheet to see what it’s pulling in.
None of those supplemental forms are checked.
Don’t think I can post a link but search for a site called DINKYTOWN. They have a 1040 calculator that is very flexible and you can run all sort of scenarios. I much prefer it to Taxcaster.
Thanks, I like those calculators a lot more than the TaxCaster since I can see them all in a list.
You will lose most of the foreign tax credit once it crosses the $600 threshold (for married couples). After that point, it moves to a form 1116 calculation and you only get the credit up to the percentage of total taxes you paid on your US income versus your foreign income. If VXUS paid about 7% of it’s income to foreign taxes (typical), and if your tax rate on your US income was 1%, then you would only get 1/7 of the credit. Basically, the $300/$600 foreign tax credit is a free lunch until you surpass those numbers. PS: Great blog, keep up the good work, love it. Travis
Thank you for continuing to share these types of posts. Quite helpful, but most importantly inspiring.
Yes would like to see your Schedule C, I don’t find much in the blogs for self-employed.
For example a Broker friend told me funds in a Simple IRA have to stay there for 2 years
before it can be rolled into a Roth ??
Schedule C is here.
GCC,
If I’m correct the Tax-free Municipal Bond Interest does not reduce the ROTH Conversion amount and does not reduce the Capital Gains Harvest amount?
VWIUX by chance? I’m planning on adding it to my taxable account.
Thanks for the great articles.
Using:
https://www.dinkytown.net 2016 Tax Calculator shows that Tax-Free Municipal Bond interest does not effect the Conversion value or Capital Gains Harvesting.
Awesome calculator.
Thanks
For that DinkyTown calculator make sure you’re not looking at the fancy graph to see how much you owe. Look above that in the text and it shows what you actually owe. I’s easy to miss that text with the nice looking graph below it. But once you know how to read the results it’s a great calculator.
It is interesting how you work the taxes via the American system … I wonder would there be an advantage if one became a resident etc of some of the various countries (Europe – Asia) …. with no capital gains tax and invested in Index funds via their stock markets ? …. I believe Belgium, Switzerland, …. Singapore, Malaysia, New Zealand, *Hong Kong and *Taiwan? … have no taxes on stock market investments, whereas the American and Canadian, not to mention Chinese DO! Would you or your readers know much about that? God Bless, China :)
If you’re married you can make quite a bit of income, around $100k, from qualified dividends and pay $0 taxes on them.
If I take money out of my taxable IRA account to live on, will it be Line 15 income (IRA distribution) or Line 13 income (Capital Gains)? I would be doing this at 60 y/o.
IRA distribution
Oops, we have an employer IRA funded with pre-tax dollars.