Generally one doesn't get a choice between W2 or 1099, instead it's determined by the facts of the situation.
But, one advantage of paying the spouse on a 1099 (assuming they qualify) is that the S-Corp wouldn't have to pay the employer half of SS/FICA on their compensation. This would be beneficial if the spouse was already over the SS wage base at the other employer that you mention. An employer always has to pay the employer half until the employee hits the wage base at that employer (the S-Corp, in this case), with no way to get it back if the employee is already over elsewhere.
Is the spouse a shareholder/officer of the S-Corp? Might be hard to argue that they're a contractor.
But, one advantage of paying the spouse on a 1099 (assuming they qualify) is that the S-Corp wouldn't have to pay the employer half of SS/FICA on their compensation. This would be beneficial if the spouse was already over the SS wage base at the other employer that you mention. An employer always has to pay the employer half until the employee hits the wage base at that employer (the S-Corp, in this case), with no way to get it back if the employee is already over elsewhere.
Is the spouse a shareholder/officer of the S-Corp? Might be hard to argue that they're a contractor.
Statistics: Posted by MP123 — Thu Dec 12, 2024 10:54 am