Best way to employ spouse?

General Real Estate Investing
1

I’m looking for some guidance from some of the tax astute people on this board…here’s the story.

I am self-employed in a non real estate business as a sole-proprietor. I have no employees, and I pay for my family’s health insurance.

My wife and I formed an LLC last year for real estate investing, taxed as a partnership. We are the only 2 partners. Due to financing and some health related issues, we’ve since had no buy or sell activity or LLC income. She now has the opportunity to do office work for the realtor that we used. He is looking for a non-employee type situation.

From a tax standpoint should we:
Have her work as an independent contractor, receiving a 1099 from the realtor?

Have her work from within our LLC as an independent contractor, with our LLC billing the realtor office and she then receiving a 1099 from our LLC?

Have her work as a hourly employee on the payroll of our LLC?

Something else?

It’s my understanding that as an employee, the LLC could provide her with family health insurance coverage as a benefit and save on FICA taxes, but I don’t know if there is enough money in this employment situation to provide that coverage along with a hourly wage.

Thanks in advance for any guidance here!

2

She is an employee as I doubt she will be allowed to come in when she feels like it, provide her own tools, and decide how she will do the job. Independent contractors are independent. I also doubt this Realtor will pay market wages since he doesn’t want to pay the employer taxes and is willing to commit tax evasion to do it. If he doesn’t pay them, then you and wife will.

3

As BLL says, that RE Agent (as is typical of the RE industry) is trying to evade an employer’s obligations as they are fairly onerous, in attempting to hire your spouse as an IC…but he’d certainly expect employee-like hours and responsibilities on your W’s part.

If I were your W, I’d sure continue to look around and find a real paying position w real wages and benefits as a RE office normally has less than desirable wages and working conditions.