Spouse Working With Me

[Scribbles]

I own and operate a small child care center.
My husband has been self-employed for many years but over the years his business has not had much income so he has slowly started working with me more and more and is now pretty much working with me all day every day now.
He has claimed a loss for 3 years in his business and this last year didn't do any business at all so he had no loss and no income.
Do I need to claim him as my employee or is he considered my business partner?
Can we just split all our center profits equally?
We are jointly listed on everything (except my actual child care license).
I would much rather he be considered my partner verses my employee but I am unsure of which method of doing this is correct or best.
I do have an EIN but he does not.
Oh and we live in Minnesota too if that makes a difference for tax rules.
Are there any pros or cons to filing a certain way?

[TomCopeland]

husband as employee

I own and operate a small child care center.
My husband has been self-employed for many years but over the years his business has not had much income so he has slowly started working with me more and more and is now pretty much working with me all day every day now.
He has claimed a loss for 3 years in his business and this last year didn't do any business at all so he had no loss and no income.
Do I need to claim him as my employee or is he considered my business partner?
Can we just split all our center profits equally?
We are jointly listed on everything (except my actual child care license).
I would much rather he be considered my partner verses my employee but I am unsure of which method of doing this is correct or best.
I do have an EIN but he does not.
Oh and we live in Minnesota too if that makes a difference for tax rules.
Are there any pros or cons to filing a certain way?

You do not have to hire your husband as your employee. If you did, you would have to withhold Social Security/Medicare taxes and your husband would have to report this as income.

If you set him up as a partner, you would have to split the income and expenses through a formal partnership and each of you would have to pay Social Security/Medicare and income taxes. In other words, you would not save any taxes by setting up a partnership.

I would recommend that he volunteers.

[Scribbles]

You do not have to hire your husband as your employee. If you did, you would have to withhold Social Security/Medicare taxes and your husband would have to report this as income.

If you set him up as a partner, you would have to split the income and expenses through a formal partnership and each of you would have to pay Social Security/Medicare and income taxes. In other words, you would not save any taxes by setting up a partnership.

I would recommend that he volunteers.

It was recommended to us that he should have an income and continue to contribute/pay social security as he won't have enough working credits to count towards collecting any disability should he ever need that. ? Something about him not having paid or earned enough since he has claimed a loss in his own business the last few years.
I know nothing about work credits and don't understand what that advice meant. I'm confused when it comes to this kind of thing
Should I disregard that and just have him volunteer then?

[Sunchimes]

Quarters are a day to keep track of how much you have earned/worked as a day to qualify for social security, Medicare, or disability. Here is a pretty clear explanation. http://www.socialsecurity.gov/retire2/credits1.htm

At the bottom of that page is a link to how many credits you need for disability. It is based on age, while you need 40 credits for social security benefits.