Where do I enter spouse's income paid from my self-employment?

[sb11]

I have self employment income that's considered a sole proprietorship.  I paid my wife around $500 in 2021 to handle some odd jobs related to the business like support & marketing emails.

How should this be entered in TurboTax?  Should it be an expense on my line of work & then entered as cash income for her on a new line of work?  Is there a better way to do this so that it's all reported properly?

Thanks in advance for the help!

[AliciaP1]

The best way to report this would be as contract labor to your business and nothing for your wife.  You can categorize this expense as Legal & Professional Fees in TurboTax. 

You are allowed to take all amounts paid to independent contractors whether or not you have to send out a 1099-NEC.  You do not have to report the payment on a 1099-NEC if you paid less than $600 during the year to each contractor.

Since you were not required to send a 1099-NEC, your wife is not required to report the income.

[sb11]

Quick follow up question:  The ultimate goal here is to properly enter the income so that we can contribute to her solo 401k.  I was just using $500 as an example for anonymizing data purposes.  It's closer to $1,000.

So, it feels like I should categorize this expense as Legal & Professional Fees in turbotax for my Schedule C.

Then, file a new Schedule C under her name.  Is that accurate?

[LeonardS]

Yes, you would provide your wife with a 1099-NEC from your business and then your wife would file a new Schedule C to report her self-employed income.  It would be more appropriate to report the 1099-NEC to your wife as contract labor.

@sb11