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Thread: help with income tax

  1. #1

    Default help with income tax

    Hi,
    I have a situation. I have a company that has been established last year, but hasn't been use yet. My husband is an independent contractor, getting paychecks on his name. Would it be beneficial to get his paychecks written on company's name and I would pay him "salary"? in order to lower income taxes that we are going to pay jointly?
    My friends told me the accounter recommended to them to open company and get paid on company for lower taxes. Can anybody explain?

    thank you

  2. #2
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    I would say no, it would not be an advantage. If for example he made 50 grand as an employee and 50 grand as an independent contractor he would still have to pay taxes on 100 grand. His social security taxes would be higher. On the employee portion he would have to pay both the employer portions and employee portions which are higher than the rate he pays as an independent contractor. On top of that you would have a lot more paperwork and a more complicated tax return and if the IRS ever audited and decided that was a scheme to avoid taxes it could create problems.

    That is assuming the company you started was an S corp. If it is a C corp then your taxes would be even higher yet.

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