I have a client who has a single member LLC. He wants to give his spouse a 1099 for doing office work for him. The spouse doesn't do office work for any other companies. I think he has to put her on regular payroll. I do not believe a spouse can be an independent contractor. Am I correct?
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I agree
For the wife to be involved it is either a partnership LLC or she has to be his employee. -
thanks for your replies
I informed the client that even if he could give her a 1099, since they do a joint tax return, it really wouldn't benefit him in anyway. His LLC may have the expense, but their joint return will have the income.Comment
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Spouse W-2
If your spouse is working for your Schedule C and you give her a W-2 that money is not subject to Federal, State, SS or Medicare. Only Fed and State Unemployment.
OK, now how many people are going "Say what? Matt is off his rocker!!!"
Hope I made you laugh today.I would put a favorite quote in here, but it would get me banned from the board.Comment
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That is a OLD LAW ( but a very good one). That comment tells me you are no young chicken, and you have been doing taxes way to long. Got ya!
By the way one very good reason for hiring your spouse and doing a W-2, is for the Medical Reimbursement Plan that would be available. (Section 105).Comment
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And then she could do an IRA for herself, and shelter it from taxes.Comment
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interesting
I wasn't aware about the rule for a spouse who is a W2 employe not being subject to anything except FUTA and SUTA. Can anyone refer me to the documentation for that? I've got alot of ma and pa clients.Comment
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It is gone
If I remember right that law expired aprox 1988. 20 years ago plus or minus a few years.
It was a good law, but is now long GONE.Comment
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