Tax Advantages to Hiring Your Spouse
- ronnice6
- Sep 24
- 2 min read
Is your spouse working inside of the business, but currently not being paid?
Have you wondered if hiring your spouse would help save on taxes?
The answer is – yes, there are tax advantages to hiring your spouse!
When you hire your spouse, you pay them wages and those wages are subject to the same taxes that you as the owner would have to pay.
So you may be asking - Where is the tax savings?
The secret to all of this is...
Tax Fringe Benefits: Benefits that are not subject to income tax.
Health Insurance Premiums
Creating a Health Reimbursement Plan – If your spouse is the only full-time employee, you can establish a medical reimbursement plan to cover all medical costs for the employee (in this situation - your spouse) and their family (you!).
Retirement Plans – Set up a company retirement plan, whether that be a SEP, SIMPLE or 401k and have your spouse contribute. Then the company can make a matching contribution. The contribution is a business expense so you can write it off.
Life Insurance – the company can provide your spouse with a life insurance plan and write it off as a business expense.
As you can see - hiring your spouse can provide you with some very nice tax savings, but it also comes with IRS guidelines and required documentation.
The IRS wants to confirm that your spouse is a valid employee. You need to think about what actions you would take if you were employing someone other than your spouse.
Have their job description written out with a list of duties and expectations.
Make sure they complete new hire paperwork.
Keep a time record of hours and work performed
Pay them a reasonable salary.
These are just a few items that are needed. Make sure you speak to a tax professional to understand the guidelines and documentation requirements.
We know all of this can be confusing and stressful.
That’s why we’ve made it our mission to help you unravel it all.
From confusion to clarity, Accountabilities has you covered.
Comments