Easier filing for spouses in business

I like making birdhouses and other decorative wood pieces, and my wife wants us to start a small side business selling them at craft shows. Would we have to file a separate partnership return to report our earnings?

No. As long as you're the sole owners of the business, you both materially participate in it, and you file a joint tax return, you can choose to report your earnings as sole proprietors on Schedule C. For purposes of qualifying for Social Security and Medicare benefits, each of you will get credit for your share of the net profits.