social security for non working spouse

[stech]

I have been working for 15 yrs and have 40 work credits in my social security. My wife doesn’t work. So I’m assume she doesn’t have any credits. We have been filing joint returns in past 2 yrs.

how can she get work credits? Can I give her 1099 from my business so that she gets some credits? Or will w2 give her credits 

[Mike9241]

Spousal Social Security benefits work as follows

• Spouses who aren't eligible for Social Security on their own work record can apply for benefits based on the other spouse's record.
• The maximum spousal benefit is equal to 50% of the other spouse's benefit.
• People can apply for spousal benefits as early as age 62, but they'll get more money if they wait until their full retirement age.
• If both spouses are eligible for Social Security retirement benefits, both are also eligible to receive the spouse benefit based on the other’s work record.
• If you are eligible for both your own retirement benefit and a spousal benefit, Social Security will pay you the higher of the two amounts.

for your spouse to get "compensated" she would actually need to perform work for your business and her compensation would need to be reasonable for the type of work performed. how her compensation would be reported depends on the type of entity.  Every dollar she gets would cost 15% or more in payroll taxes, again depending on the type of entity. 

[Opus 17]

"how can she get work credits? Can I give her 1099 from my business so that she gets some credits? Or will w2 give her credits "

If she actually performs material work for the business, you should have been compensating her all along.  (you can file amended returns, although this will be complicated because you will not only need to report her compensation, you will need to adjust your business return to reflect the expense).  Or if she will start performing material work, and you pay her a fair market wage (what you would pay an unrelated person to perform the same duties) then that's perfectly fine.  If it would be sham job just to get credits, that could be viewed as benefits fraud.

She would get SS credits whether she is a W-2 employee or 1099 subcontractor. Which way to pay her really depends on the working relationship, the rules are the same for any other employee or contractor (ignore your personal relationship when figuring this one out).  There can be penalties for misclassifying a person's role.

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...

If you do not already have employees, hiring your wife will entail withholding social security and medicare tax and state and federal income taxes, filing quarterly form 941, a similar form with your state, issuing a W-2, and complying with any other state or federal laws and regulations about employees.  (For example, state laws regarding minimum wage and certain benefits may apply even if she is a related person.)  The wages and other expenses become business expense deductions on your business and taxable income to your wife, which should come out more or less even, except for the cost of the paperwork.  If she has the duties of an independent contractor, you would issue a 1099-NEC and she would report her own schedule C business and pay self-employment tax, in addition to reporting your business.