Employing your minor children

Posted by Andy
This is an area where you want to tread carefully and really toe the line, but it can offer a good tax deduction. The key here is being reasonable in your compensation amounts. Can a 3 year old really earn $5,000 a year? Come on people. But a teenager can do valid work around the office and get paid for it. This shifts the income from your tax return to theirs. I can almost guarantee that your kids tax bracket is lower than yours. It could also qualify them for contributions to a Roth IRA (which might not be a bad college funding choice!).

As an added benefit, if you file as a Schedule C self employed business you can avoid payroll taxes on the payments to these kids. (Sorry corporate filers, you have to pay social security and unemployment taxes on your kids pay just like everyone else pay).

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The content on this blog (www.acollinscpa.blogspot.com) is my personal opinion based on my study and understanding of tax laws, policies and regulations. It’s provided for your private, noncommercial, educational and informational purposes only. It’s not a recommendation or endorsement of any company or product. It should not be relied upon as specific tax advice for your personal situation. I strongly suggest that when it comes to filing your taxes, you get additional, professional guidance from individuals who are familiar with your specific circumstances. Those who choose to rely solely upon the information on this site do so at their own risk and peril, and cannot hold the author liable in any form or fashion.

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