2022 was our first full year back in the United States, which means we were fully in the crosshairs of the 3 US tax systems: Federal, State, and ACA.

One might think this would result in a large tax burden. But no.

Although the incentives have certainly changed.

The Go Curry Cracker 2022 Taxes

Executive Summary

We had multiple streams of income totaling $60,534. State taxes and ACA premiums incentivize low income.

I’m not completely sure how to calculate our effective tax rates in this system – we received over $16,000 in credits, receiving far more than we paid in… If I ignore health insurance and higher future SS income, we paid ~$1,200 out-of-pocket for various taxes for an effective tax rate of 2.0%.

Overall we paid $0 in federal income tax (net $3,000 paid to us in refundable tax credits), $0 in California income tax, and $4,233 in self-employment taxes (which increase future SS income.)

Form 1040

  • Income – $60,534
    • W2: $2,789 (who woulda thunk)
    • Interest: $1,036 ($925 from bank bonuses.)
    • Travel hacking: $0 (but just booked $7,000+ worth of travel for $0 out of pocket.)
    • Dividends: $29,411
      • Qualified: $25,503
    • Blog profit: $30,298
    • Roth conversion: $0
    • Capital Loss: -$3,000
    • Capital Gain harvest: $0
  • Federal Income Tax: -$3,000
    • Income tax: $730 (Line 18)
      • Income tax: $458 (Line 16)
      • ACA excess tax credit repayment: $272 (Line 17)
    • Tax credits: $730 (Line 20)
      • Foreign Tax Credit: $130
      • Child and Dependent Care tax credit: $67
      • Retirement savings contribution credit: $400
      • Residential energy credits: $133
    • Additional Child Tax Credit: $3,000 (Line 28)
  • Self-employment tax: $4,233 (Line 23)
  • Retirement Contributions: $32,500
    • Solo Roth 401k: $20,500
    • Roth IRA: $6,000
    • Roth IRA – spouse: $6,000
  • ACA – MAGI = 215% FPL
    • Total premium tax credit: $12,344
    • Premiums (paid by me): $1,212
      • In advance: $1,212
      • Form 1040: $272 (paid by tax credit on Form 1040)
  • California: $0
    • Tax: $636
    • Exemption Credits: $1,146 (nonrefundable – opportunity to increase tax burden next year)
    • Net: $0

This is how it all looks on the 1040 -> (copied from Turbotax)

Roth Conversions and Capital Gain Harvests (or lack thereof)

Over the past decade we have done annual Roth conversions / Capital gain harvests to minimize future taxes. The future is now.

As in years prior, I used our tax optimization calculator to get a first glance at the options. The calc tells you what is possible tax free at the federal level, but doesn’t include tax credits…

Were we outside the US, I would have definitely harvested some capital gains. We also left $1,000 in child tax credit on the table so a $10,000+ Roth conversion is on the table.

But now that we are in the crosshairs of the 3 US tax systems (Federal / State / ACA) I actually did nothing, thanks to the ACA.

I previously wrote about optimization of health insurance premiums.
(see: Obamacare Optimization in Early Retirement and The Obamacare Tick-Tock.)

Any additional income would have increased health insurance premiums at a marginal rate of ~14%, even without increasing federal or state tax burden.
(see: ACA Premium Calculator.) It may have also forced us into a lower tier of plans for 2023 (from Silver 87 to Silver 73), increasing our deductible and out-of-pocket max for the year (e.g. raising out of pocket max from $1,000 to $6,000.)

I could argue that we should have done a sizable Roth conversion this year (especially with the markets down.) And similarly tax-loss harvesting was maybe not worth the effort in this particular year. 14% is not an unreasonable marginal rate.

ACA Premiums and Credits

A very interesting thing happened with ACA premiums this year. First, a snap shot of Form 8962 showing advanced premium tax credits:

On Form 1040 the IRS determined that we actually under-paid our premiums throughout the year by $272 so this amount was added to our total tax (ACA excess tax credit repayment.)

As a result, the total tax credits we were able to collect INCREASED by an equal amount.

Conclusion – for ACA purposes always take a pessimistic approach when estimating annual income
(Related: Obamacare Advanced Premium Tax Credit Repayment Limitation.)

Estimated Taxes and Travel Hacking

An interesting thing, nowhere on our 2022 tax return does it show the $7000+ of travel I just booked using credit card rewards 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.)

Ironically, we actually got a lot of these points by paying taxes – we pay self-employment taxes quarterly, and I often use that “opportunity” to meet the minimum spend on a new credit card. I paid estimated taxes of $2,900 to the IRS and $550 to the California FTB this year on new cards,

If you are going to have to pay some taxes anyway, you might as well get a nice vacation out of it. Even if you are not going to pay some taxes anyway, get a nice vacation out of it :)


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In the US under the triple taxation system (Federal, State, ACA) the incentives are to keep income low. I didn’t do a Roth conversion or harvest gains as a result (and in fact harvested a loss.)

Overall though, it was a good year – we paid next to nothing in taxes, got nearly free high-quality health insurance, and contributed $32,500 to Roth accounts. Social Security income will be higher due to the payment of self-employment taxes. Low taxes now. And low taxes later.