Over the past few weeks I’ve replied to numerous comments and questions, loosely paraphrased as:
“I’ve read that you aren’t a big fan of Roth accounts, but in your post about not paying taxes for 5 years you show how you routinely contribute to Roths. Isn’t that a bit hypocritical?
Maybe.
It’s a totally fair question. Let’s find out.
The end of 2017 marked the completion of 5 full years of early retirement and world travel.
It’s been a fun ride so far… we’ve traveled a bit, had a few good meals, and taken many naps.
But how effective have these 5 years been in terms of implementing our tax minimization strategies? Are Roth IRA Conversions and Capital Gain Harvesting just fantasies we keep while working, or do they actually produce results in the real world?
Let’s do a financial check-up and see how we are doing.
Here it is folks, the post exactly 3 of you have been waiting for… our 2017 tax return. Just in time for the October 15th deadline.
It’s an interesting one this year; 2017 is the first time we claimed the Foreign Earned Income Exclusion (FEIE) which allowed us to once again have income in excess of $100,000 and pay $0 in income tax.
Details on the FEIE were difficult to come by, and examples either lacking or confusing, so this FEIE example is for posterity.
The Foreign Earned Income Exclusion is a great tax saving opportunity for Americans living abroad, allowing the exclusion of $104,100 in foreign earned income per person in 2018. Nice!
But… Of all the tax topics I’ve explored, the FEIE is among the most convoluted and obfuscated. For one thing, documentation uses words like convoluted and obfuscated. Worse, much of the information on the Internet is confusing or inaccurate.
It also isn’t necessarily obvious if a person should claim the FEIE, and doing so isn’t guaranteed to be advantageous.
In this post I attempt to explore the FEIE and when to use it, for ourselves and our posterity. (Well, ourselves at least… should we FEIE or nah?)
A hero ventures forth… (photo courtesy of Early Retirement Dude)
[GCC: Travel has a way of opening us up to the world around us and the people in it. The connections and friendships found on the road are some of the most longstanding and powerful we have. Early Retirement Dude abides.]
Early retirees like Jeremy and Winnie and I get to travel a lot. And as you know, we like to talk about it. So hear me, O My People.
Once upon a time there was a bicycle tourist—I, your humble narrator—who was riding section four of the TransAmerica Bicycle Route from West Yellowstone, Montana to the Adventure Cyclist Association headquarters in Missoula. I’d climbed all 7,241 friggedy feet of Chief Joseph Pass in a hellacious headwind on a fully-loaded bike, and I was now laboring down the steep slopes of the Bitterroot Mountains. Yes, laboring down, because that’s how bad the headwind was. Thirty MPH? At any rate, it was impossible to coast.
It was a low, low, moment in my life. I was sweat-crusted, jelly-legged, cursing plate tectonics IN A THUNDEROUS VOICE, and as physically exhausted as I’ve ever been.
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