Hire Your Child

consignment-shop_LI Hire Your Child

The newly-increased standard deduction gives rise to an opportunity for self-employed taxpayers to hire their children and pay up to the $ 12,000 standard deduction amount. The child does not have to pay income taxes on the money and if under eighteen years of age, the child does not pay social security taxes either. The parent gets to deduct the amounts paid to the child as wages.

The catch is that the duties of the child must be written out and the child must actually perform those duties. The amount must make sense. A $12,000 income cannot be justified for a seven-year-old who empties the office trash once a week, but may with older children who can help with marketing and tech-type projects.

Documentation and common sense are the keys to this.

If you need help with determining if your child is considered an employee, give me a call.