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 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.
Hey GCC, the Foreign Earned Income Exclusion is amazing! Thank you so much for making me aware of this – I’m able to pay no tax on my entire earned income! I also saw on your blog that it is possible for a married couple to earn about $100,000 in qualified dividends and long-term capital gains. Can I do that too?! That is, since the FEIE excludes all of my overseas work income, can I also harvest $100k of capital gains tax free?! Cuz that would be sweet!`
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?)
