1099 or W2 for helping relative?

[Allende Hernandez]

Hi guys,

Reading about taxes and ways to keep more money on this side of the road I've realized I should have my wife as an employee/contractor to my company. She normally helps me with some of my investments task like visiting houses, inspecting them, analyzing deals, etc. 

Now, the question is, should I have her under a W2 or a 1099? If I have her under a 1099 my company may save on FICA taxes but then I am passing the buck to her, hurting the household. If I have her under a W2, she gets to keep more but then my company has to pay a bunch of other taxes. 

What makes more sense financially given that it all stays in the same household.

Thank you in advance and Happy Investing!

[Dave Toelkes]

@Brandon Hicks,

A fix and flip business is an active income activity, not passive, and self-employment income taxes apply.

@Allende Hernandez,

Your fix and flip business will still pay payroll taxes on all "salary" paid to yourself and to your wife.  Hiring your wife won't reduce the taxes if the combined salaries you and your wife take is the same as you would take yourself if your wife was not an employee.  If you are just starting out, then the IRS will probably consider all your business income as self-employment income and you will be assessed payroll taxes on all the business income anyway regardless of whether your wife was an employee.  In my opinion, hiring your wife is tax neutral as far as the payroll taxes go.