1099-MISC For Spouse?

mr-ed · #1 (**permalink**) 01-29-2009, 11:40 AM

Here's the situation:

I run a home-based business that requires me to hire my wife for some administrative contract work in order to help me with my business demand. She has her own business that offer such services which is also a home-based business. The amount does exceed the $600 limit.

As always, we will be filing a joint return.

My question is this:

Should I file a W-9, report the income and provide a 1099-misc to her?

Thanks.

TaxGuru · #2 (**permalink**) 01-29-2009, 05:34 PM

My question is why are you complicating your situation! Why don't you make this a joint business, say an LLC and the monies that are paid to either you or your spouse consider it as a distribution.

Alternatively, treat amounts that are paid to your spouse as a draw, as if you are taking the salary. There should be no impact on the tax return. There really is no need to go through all the trouble of doing a W-9 and issuing a 1099-Misc, at least that is based on the limited information that you have provided to me.

mr-ed · #3 (**permalink**) 01-29-2009, 11:50 PM

Quote:

Originally Posted by TaxGuru

My question is why are you complicating your situation! Why don't you make this a joint business, say an LLC and the monies that are paid to either you or your spouse consider it as a distribution.

Alternatively, treat amounts that are paid to your spouse as a draw, as if you are taking the salary. There should be no impact on the tax return. There really is no need to go through all the trouble of doing a W-9 and issuing a 1099-Misc, at least that is based on the limited information that you have provided to me.

There are various reasons why our businesses are seperate. One reason is due to SSDI that I receive (blind disabilty) which I can make certain amount per month (over 12 month period). Often times I would hire my wife to take care of some business that I cannot handle myself.

The business is not a LLC (or jointly with my wife) because of another reason which I like to keep personal. So the question I wanted an answer to is how the money is handled if I paid for services rendered? Should I have her fill out a W-9 and report the income and send her a 1099-misc even though we file jointly on our tax return?

Again, I am paying to her business in which she offers services to me. I really don't think it falls under expenses.

Thanks.

TaxGuru · #4 (**permalink**) 01-30-2009, 12:28 PM

In that case, maybe your circumstances dictate that you could provide your spouse with a 1099-Misc, in the name of her Company though! You certainly also discuss this with your Tax adviser to determine what would be the best approach for your unique situation.

TaxGuru · #5 (**permalink**) 01-30-2009, 10:42 PM

The best solution is to issue a 1099-Misc in the name of her business, assuming of course she is conducting a business as either an LLC or as a DBA. This should suffice! Report the amount paid to your spouse on the 1099-Misc and then send a Red copy of the Form 1096 Annual Transmittal Form along with a Red copy of the 1099-Misc to the IRS.

Legally speaking you can still file a joint return as well even if your business issued a 1099-Misc to your spouse's business. It happens all the time!