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My wife is a realtor. She receives a 1099 and we pay taxes on that. I was talking to one of her fellow realtors and she told me that she had incorporated and now all her earnings come down to her as pass through (I assume as dividends?). I wonder if this is a good (and legitimate) strategy?

I suspect by using this method she avoids self employment tax, which in her case might not be a good thing in the long run. But in my wife's case, I don't know if it would matter. Over the years I have earned substantially more than her, so whey we claim our SS benefits, she will claim the additional spousal benefit, bringing her total SS benefit up to 1/2 of mine (as I understand it). So if I understand things correctly, her paying in additional self employment taxes adds nothing down the road for us.

Any thoughts or advice would be greatly appreciated.

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