Corporation and Income Tax Liability for Spouse
My husband is self-employed insurance salesman. I want to protect myself from his income tax liability. If he were to incorporate and the business was in his name only would that protect me from any income tax liability that is incurred from the income from his insurance sales? Or how about limited partnership or some other type of business set up? Thanks for your help.
1 Answer from Attorneys
Re: Corporation and Income Tax Liability for Spouse
Regarding federal income taxes, you are liable for taxes on your husband's income to the extent that you file a joint tax return. If you wanted to avoid liability for his items of income then you would want to file a separate tax return -- using married filing separately filing status.
You should speak to an attorney about how to structure this so that your husband's creditors (including the IRS) cannot come after your assets to cover his debts. A business entity may or may not help in this regard (probably not). Whatever you do, you want to be careful not to make a fraudulent transfer under state or federal law.
I hope that helps. Nothing in this post is to be construed as legal or tax advice. You must contact your advisors so that they can consider your particular circumstances.
Good luck,
Kreig Mitchell, Esq.
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