I'm just looking for feedback to get the ball rolling on how to plan for tax purposes.
My wife and I are self employed, a we usually just split the business income for tax purposes. Have for 17 years.
We split about $76k, so $38K each. I am 4 years from FRA, she is 9 years for FRA. I see having the business
only 5 more years. I'm already cutting my work way back.
I have been on the SS site and found if I continue earning $38K, it does very little to increase my SS benefit.
Increasing her income would do a lot to increase her SS benefit.
I'm thinking about changing our income split, but need to get more understanding how it will affect us.
As it stands we both max our SEP/IRA ~$7,000 each and we max out an HSA ~$7,650.
We have two kids in college so have college deductions and credits. Last year we paid less than $1,000 federal tax and $11,500 in SS tax. We have a very low Federal Income tax, but as you see there are no deductions to reduce SS taxes. But I'm to the age where I almost want to pay more to increase my benefit, well, not quite :-).
If I change the split to $10k and $66K, I assume the SEP/IRA deduction would be the same amount just divided differently? The HSA, still the same?
Anyone see problems with my idea?
There is another scenario, having separate 1040 forms, this I have less info about, but the advantage I'm looking for is the Roth Conversion. If I have $0 income or even $10K, I could do a pretty good amount in a conversion without any tax cost. I think? But we would at the very least lose some tax advantages of a combined form, I think.
Feed back is appreciated.