Get (and Your Spouse''s

The IRS wants Social Security and Medicare checks to be withheld from any earnings. This will increase the overall tax burden on your family. However, if you want to have retirement benefits through your company, like a 401(k) plan or a cash balance plan, then having your wife on the payroll can be a good thing.

Instead of wages, you should pay your spouse entirely, or mostly, with tax-free employee fringe benefits. Certain types of employee benefits, such as health insurance, are not taxable income for your spouse-employee, yet they are a deductible expense for you as your ...

The answer is to list your spouse in the shareholder section, but note that he or she is not a shareholder. As you list all of the owners and their information, do include your spouse in the list, and do get his or her signature.

Essentially, if your family has a lot of medical costs, put your spouse on the payroll. It may allow you to utilize the Health Reimbursement Arrangement (HRA). However, keep in mind that you would have to utilize a sister management company (typically a Sole-Proprietorship).

The S-Corp election for businesses requires the permission of all of its shareholders, and as such, the other spouse must also include their information and acceptance of the agreement. It is crucial that both spouses sign, even in the case of a solely operated business that is shared by community property law.

In your S corporation, your spouse is not a regular employee to whom you can provide all fringe benefits tax-free while deducting those expenses on your tax return. When your S corporation has your spouse as an employee, the tax code gives you a limited list of fringe benefits.

If you decide to put your spouse on the payroll as an employee, you must treat them as an employee in every way: Give your spouse a title and an appropriate salary for that title. Have your spouse complete all the required new hire forms and payroll authorizations, the same as any other new employee.