Tax Playbook · Business owners
Hire your spouse
Hiring your spouse as a real employee lets you deduct their pay like any other wage, and it can unlock a second solo 401(k) for them. The IRS says their wages face income tax plus Social Security and Medicare taxes — but no federal unemployment (FUTA) tax when hired by a sole proprietorship. Their pay must be fair for real work they actually do. Watch out: S-corporation rules work differently, so check your entity type first.
Good for: Business owners whose spouse does real work in the business.
Learn the basics
- IRS: Tax Treatment for Family Members Working in the Family Business
- IRS Tax Tip 2022-151: Taxes When a Family Member Signs the Paycheck
Recent articles & guides
- Roth Solo 401k Rules: Are Spouse Contributions Allowed? — Solo 401k
- Should You Hire Your Spouse to Save on Taxes? — McSwain Hiott (CPA)
- Paying Your Kids Through Your Business: Tax Rules & Benefits — Creative Advising (CPA)
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Educational summary, not tax advice. Limits and rules change — confirm current law with your tax adviser.