Forgive a stupid (tax) question...

[thaidyed]

I've been reading as much as I can but I'm still a little iffy on tax implications, so if you'll bear with me as I ask a stupid question:

Due to ability to exclude almost all my foreign earned income, I currently, and for the next 3-4 years at least, have a low AGI ($6000 this year, be up to say $25,000 tops while abroad). I have a fully-funded Roth (Vanguard) and I have some offshore investment accounts but in the interests of trying to get every last penny out of sight and off at work, I'm now thinking to open an account with Vanguard (that won't be tax protected in any way) to buy some more indexes (domestic & int'l, REIT, etc) :: Partially this is inteded to hedge my offshore investments in high return, high risk, and (no doubt) high hidden fee funds.

I am in my accumulation phase and money into this account would be left untouched for at least 10 years. The calculators say I could FIRE in 10 years at this rate but as I'm about to start having kids I think that's probably a little too optimistic (currently 30, married).

SO. The question is: how much tax burden will I be getting myself into if I do this? To hear people chat on here...seems I need to be very careful about what I buy but...I must admit I'm at a loss as to what constitutes a "smart" move at this stage.

I've got a large chunk of cash in high yield online savings & CDs so I had something like $3000 in taxable interest last year. But having done those taxes, I see how that works and can estimate it. Though I've had a Vanguard account for 8 years, its a Roth, its the S&P 500 index, and its had no effect on my taxes whatsoever.

Any advice greatly appreciated!

 

[bpp3]

my offshore investments in high return, high risk, and (no doubt) high hidden fee funds.

Please tell me you know about the PFIC rules...

(This is my one-note refrain; Unclemick gets the alluring, "Psst, Wellesley!," while I am reduced to a shrill, "Shun the frumious PFIC!")

To answer your question, though, some index funds in a taxable account at Vanguard sounds like a fine idea for your situation. I might avoid the high-dividend REITs there, though, since you will get whacked by the stacking rules. (Your taxable income may be low, but the tax bracket is high, being stacked on top of that income which was excluded by the FEIE.)