If my husband is self-employed, can he pay his spouse, me, $4,000 a year and not have that amount treated as taxable income to the wife?

ANSWER

The BIDaWIZ Team's Answer:

Yes: provided that he does not deduct the payment, as a business

expense. However, a better alternative is to deduct the compensation,

as a business expense, and report the $4K, as salary to the spouse, and

then have the spouse deposit the $4K in her own IRA account; thus, deferring

tax, on the $4K, while still receiving a $4K business expense deduction.