Instead of being a co-owners of a business, spouses can have an employer-employee relationship-that is, one spouse solely owns the business (usually as a sole proprietor) and the other spouse works as his or her employee. In this event, there is no need to worry about having to file a partnership tax return. One Schedule C would be filed in the name of the owner-spouse. The non-owner spouse's income would be employee salary subject to income tax and FICA(Social Security and Medicare)
However, a spouse is considered an employee only if there is an employer/employee relationship- that is, the first spouse substantially controls the business in terms of management decisions and the second spouse is under the direction and control of the first spouse.
If the second spouse has an equal say in the affairs of the business, provides substantially equal services to the business, and contributes capital to the business, that spouse cannot be treated as an employee.
Have any tax related questions or need IRS tax help?
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BBB ACCREDITED BUSINESS
Have any tax related questions or need IRS tax help?
contact us (800)790-8574
BBB ACCREDITED BUSINESS
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