My husband is the owner/broker of a real estate company single member LLC. I, his wife works as an independent contractor Agent. How can I get the income to get SE Tax?

[theckt]

He has been claiming all the income in the past. He doesn't need the SE Tax. He's getting SSI. So, I would like to pay into SS so I can get the benefit. We file Married filing Jointly. How do we need to file? Do I need a separate schedule C? Thank you.

[Vanessa A · Accepted solution]

Are you also a broker? Are you a sales agent?

If you were a real estate agent working for your husband as a salesperson being paid commission as an independent contractor, then he would issue you a 1099-NEC for the work you performed.  The money he paid to you would then be reported on your own Schedule C and deducted from his.  This would shift who the SE Tax is being paid for. This would have to be legitimately paid and not just a way to shift income from one of you to the other.  Ex. You sold 5 houses and received a commission of $25,000, he would issue the 1099-NEC for the $25,000.  He could not issue the 1099-NEC for ALL of his earnings to simply shift income from him to you. 

 According to the IRS, when spouses are in business together, they are either employer/employee or partners.  This means, in order to claim the income, the income would have to be either paid to you as a partner or paid to you as an employee.  A sub contractor relationship would also be allowed.

If you are married, depending on which state you are in, and if you are a broker/agent and can become a partner in the LLC, you would then file a form 1065 for partnership income.  You would then be able to allocate a percentage of income and expenses to each of you in whichever way makes most sense for the business and you and your individual participation.  Each of you would then receive a K-1 to report on your personal tax return. 

Another option for married couples is a qualified Joint Venture then you would both file a Schedule C.  Since he has an LLC, you would not be able to be considered a Qualified Joint Venture unless this was dissolved or not part of the business. 

If he chooses to treat you as an employee, then he would deduct your wages from his income but he would need to make payroll tax payments on the income you receive.  He would also need to give you a W-2 at the end of the year.  Depending on your actual services to his LLC, this may be your actual role.  Since he has not paid any actual employment taxes on you for 2024, if he would do this now, it would likely create a penalty for failure to pay employers taxes.  However, going forward, this would be a way to pay you for the work that you are doing and allow you to collect social security credits while doing so.