Ok all you tax optimization enthusiasts, help me out here.
Due to a confluence of events, I have a (possibly one-year-only) opportunity to really drive down our taxable income and dip into some of those delicious refundable tax credits. Here are the basics:
Me:
$68,000 gross earnings
$5,000 health insurance premiums
$12,000 SIMPLE IRA
$1,200 Flex Spending (health care)
Wife:
Income from freelance media work and teaching childbirth classes. Total is unknown and probably small; let's say it will be $10,000 net of business expenses.
We have 1 child.
We will both make max IRA contributions.
We will pay at least $2,500 in student loan interest
The question is, what is the absolute minimum I can get my earned income, AGI and taxable income to?
I'm pretty sure we can use the solo-401k to contribute 100% of my wife's income between employee contribution, employer contribution and contributions under my name (I will legitimately be helping with some of her business stuff). Where I'm stuck is this: my SIMPLE IRA only allows me to contribute $12,000, but the rules allow me to combine it with other contributions to retirement plans up to the 401k limit of $17,500. As I understand it, my wife and I combined cannot contribute more than her net self-employment income to retirement accounts, so even though I could contribute what I "earn" from her business up to $17,500, that can't offset any take-home pay from my full-time job. Is that right? Is there any way around it?
Other random notes:
We are selling our previous apartment, and will probably not buy a new home this year. The sale will not show a profit.
We will have a very small amount of taxable interest and capital gains, say a few hundred dollars.
Spending is irrelevant (in the extreme case, even if we contributed 100% of our income to retirement plans we have other money available to live on... see random note 1)
I have a potential bonus at the end of the year. It's my first year at the company, so I don't know how much it usually is, maybe a couple thousand dollars. Its a super-small company, so I might be able to get them to defer it until after Jan. 1, 2015, but maybe not.