Checkmark iconCan I Write This Off?

can i pay my wife

TL;DR

Paying your spouse for legitimate business services can be deductible, but it must be reasonable and necessary, and the spouse must be treated as a bona fide employee or contractor.

Detailed Answer

To deduct payments made to your spouse as a business expense, the payment must be for actual services rendered that are ordinary and necessary for the business. The compensation should be reasonable in the context of the work performed. You must treat your spouse as you would any other employee or contractor, which includes issuing a W-2 if they are an employee or a 1099 if they are a contractor. The IRS scrutinizes these deductions closely to ensure they are not disguised personal expenses. For example, if your spouse handles your business's bookkeeping, you can pay them a market-rate salary for those services. However, you cannot deduct payments that are not for actual services, such as gifts or personal expenses.

Where to Put It on the Tax Form

Schedule C, Line 26 (Wages) or Line 11 (Contract Labor), depending on the employment status of your spouse.

Real World Example

A freelance graphic designer hires their spouse to manage client communications and pays them $15,000 annually. The designer issues a W-2 and withholds appropriate taxes. This payment is deductible as a business expense on Schedule C, Line 26.

Audit Risk & Documentation Tips

The audit risk is moderate to high due to potential abuse. Keep detailed records including employment contracts, job descriptions, time logs, and proof of payment. Ensure the compensation is reasonable and comparable to what you would pay a third party for similar services. Retain copies of W-2s or 1099s issued to your spouse.

IRS Reference

IRC §162; IRS Publication 535 (Business Expenses)

Relevant Industries

FreelancersConsultantsSmall Business OwnersFamily-Owned Businesses

Popular Related Pages

Related Questions

Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on January 31, 2026

Back to Search