MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The 4th Tax Day of Christmas: Putting Your Spouse on Payroll

26 Dec 2019 · 2 min

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This content was created by MARK KOHLER. This content was uploaded by MARK KOHLER. This is a YouTube video titled "The 4th Tax Day of Christmas: Putting Your Spouse on Payroll" (posted Dec 26, 2019) featuring MARK KOHLER in a solo tax-advice segment. He discusses whether small-business owners should put a spouse on payroll before year-end, covering S corporation vs. LLC treatment, payroll/FICA/tax implications, using payroll to enable funding a spouse's 401(k) or IRA, and cautions to read the linked article and consult a tax advisor before acting.

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On the fourth day of Christmas, my spouse brought me a paycheck. Alright, well maybe you're going to give your spouse a paycheck. Should you put your spouse on your payroll? Now, for those of you that are single, maybe it's time to get married. That's a great tax write off too, but lots of extra baggage. That right? Anyway, so we want to talk about should or should we not be putting our spouse on payroll before year end. A lot of people think, well they deserve it, I need to pay them or I want to pay them so they get Social Security, or I want to pay them so they can fund an ira. A lot of those are very bad decisions end up costing you. Now if you want to pay your spouse, that's great, but you can oftentimes through of course the S Corporation, take it as a draw. And if you're just operating as an llc, you're not going to create FICA or payroll tax to pay your spouse. Anyway, finally, why do we do all this? Why do I like to put my spouse on payroll? It's because I want to fund my wife's 401k. Now some of you, you want to fund your husband's 401k, your wife's 401k, doesn't matter. But the point is, in a small business, giving them a paycheck opens the door to fund a 401k. Maybe there's a health care reason, but that's about it. Now there's a lot to talk about here. There's an article down below. Please read every see if it's going to help you in your situation. So just don't do it blindly. I'd love to give your spouse a paycheck on the fourth day of Christmas, but it may not be the right move. So study up and talk to your tax advisor.