How do I file taxes if I work for my husband, who is a sole proprietor?

[jfgdura]

Do I pay myself with business checks and I file my own Schedule C?

[leeloo]

If you are an employee of his company, you will need to issue yourself a Form W-2 and withhold payroll taxes. This will show on his Schedule C as an expense.

Please see this link for more information. 

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-1099/employee-independent-contracto...

[CatinaT1]

It depends.

Are you an employee or contractor for your husband? If you earn wages or income from your husband's business, then what he pays you from the business is an expense to his business.

If he is paying you as an employee, he would have a wage expense and withholding tax expense for the taxes he is withholding.  He would issue you a W2, which you would then file with your return. How you stated your questions makes me think you are not being paid as an employee.

If he pays you as a contractor and writes you a check or gives you cash for the work you have performed, you are then self-employed as well. He would have contractor labor expenses in the amount he paid you on his Schedule C.

You would then file your own Schedule C, reporting all income and expenses for your business. If he paid you more than $600 in the tax year, he would be required to issue you a 1099-NEC.

Below are a couple of links that might be useful to you.

About Schedule C

Self Employed Individuals Tax Center

[jfgdura]

Hi Catina,

Thank you for your response.  My husband has an auto repair shop and I am the office manager. I do all the bookkeeping, financial and administrative work. It is part time, and I have not taken any compensation in 8 years because I had other part time jobs as well. But now I don't and I am concerned about continuing to build my social security earnings.

I think I would be classified as either a contractor or it could be a qualified joint venture. To be an "employee" sounds like a lot of extra work and extra taxes.

[Anonymous_]

@jfgdura 

See https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorpo...

If you materially participate in the business, you need to decide how you want to handle the tax reporting. 

This could be as simple as filing two separate Schedules C (i.e., without the need to actually issue you a check as an independent contractor).

[leeloo]

@jfgdura

Unfortunately, it's not about what's the easy way to do it. The IRS has strict classifications as to who is an employee and who is an independent contractor. It sounds from your job description that were you to begin to get paid for your work, you would be an employee

You could possibly be a QJV but you have been acting as an unpaid helper for some years.

A qualified joint venture is a joint venture that conducts a trade or business where (1) the only members of the joint venture are a married couple who file a joint return, (2) both spouses materially participate in the trade or business, and (3) both spouses elect not to be treated as a partnership. A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company).

[jfgdura]

Hi leeloo,

We fit the classification of a qualified joint venture. If I have been doing this work unpaid for years, are we not allowed to file as a qualified joint venture now?

[Anonymous_]

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@jfgdura wrote:

We fit the classification of a qualified joint venture. If I have been doing this work unpaid for years, are we not allowed to file as a qualified joint venture now?

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There is no time period specified in the IRS rules or regs that would prohibit you from filing as a QJV at this point.

[jfgdura]

Thank you! 

[Beachcomber]

@Anonymous_ Since @jfgdura expressed concern for building social security history, I'm curious if they could also amend past tax returns to file them as QJV sole proprietorships to increase their social security history?  If so, how far back can one amend?  It may not be worth the trouble, but I just wondered if that would be advantageous and possible?

[Anonymous_]

It may not be worth the trouble, but a taxpayer can amend as far back as they desire. However, refunds are limited to the 3-year SOL period.