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It seems to me that the rules are such that if you hire and pay a family member such as a spouse or child, you are not required to pay any FICA for them. You do have to report their income on a 1099, but it is then up to them to report that on their taxes and pay whatever is appropriate.

So my question is what happens if DH, who is self-employed, actually paid me for what I do for the business? Could he just pay me, declare that as an expense as is done with other 1099 workers? If he did that, then he would not be keeping that money as his salary, and he wouldn't have to pay that 15% FICA on the money. As I max out on FICA anyhow, it seems to me that even though I'd have to declare that money as income and pay taxes on it, we'd still be saving 15% since we wouldn't have to pay FICA.

This seems to easy and straightforward to me, but from what I've read in the tax publications, it certainly looks legal. Has anyone done this? What am I missing?
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