I'm starting a new job soon where my income will be higher than I originally expected and coupled with having a new little one and DH being self-employed, we're going to cut him back on work hours to take care of the baby more. However...we would like him to work a little bit to get credits for social security, keep up his skills for the marketplace, and fully fund an IRA that we can deduct from taxes.
I know we won't pay any federal taxes since we'll be deducting the full amount for the IRA, but he also would need to pay the 15.3% for self employment taxes. I assume this means he needs to make more than $5500 because he can't deduct self employment tax, do you follow? Is this right or am I over thinking it?
My guess would be then that in order to have a fully funded pre tax IRA, he'd need to make gross of $6500 (15.3% is $994, subtracting that from the total would be a little over $5500).