I understand that ferderal taxes start at about 16k of annual income (though you still pay fica/medicare on all) and that a SIMPLE IRA allows you to contribute approx 11k/ year. In theory then can you earn 27k and only pay fica/medicare on the 16k and not owe any federal income tax on the remaining 11k since it went into the tax deferred SIMPLE IRA?This is a question as a self-employed individual.
To take it a step further, suppose your net rental "income" was 27K(passive) , there would be no fica/medicare since its not earned wages,but are you eligible to place 11k into a SIMPLE IRA and still not owe any tax on the 16K.
I realize this is a hypothetical and will f/u with my CPA, but just wanted to get some general feedback. Also would the ATM could into play.