2020 was an interesting year in many ways including all things taxes… I mean, we paid $0 in income tax (again) on ~$143k income.
This was in part because dividends and blog revenue were lower due to COVID-19, which is a bummer. But it is also because we welcomed another child tax credit into the family, which is nice. Plus, he’s kinda cute.
But that’s not all… for all of you tax aficionados, this year’s tax return offers some good examples of both short and long term tax minimization, including use of the Foreign Earned Income Exclusion, the Child Tax Credit (with phase out), capital gain harvesting, Roth conversions, the Foreign Tax Credit (on International equities), and more.
2019 was our 7th full year of this thing we do. It’s been an incredible ride – we’ve traveled, adventured, and procreated, with the best yet to come.
We’ve also done a fair amount of tax optimization, paying little tax each year while taking steps to minimize future taxes. How effective have we been with our tax optimization strategery?
Do these optimization efforts actually work, or is this just fantasy? (Caught in a landslide, no escape from reality…)
This week, a fairly common question from the inbox:
Hey Jeremy, thanks for the great blog! I’ve read all of your stuff. Like you, I’ve put a lot of our retirement portfolio into VTI / VTSAX. VTI pays about 2% which is only half of what the 4% rule allows us to spend. How can I live off just dividends? What about the other 2%?
The answer is simple: don’t live off just dividends.
