If you have a business and you have kids, have you discovered how many benefits there are to putting them to work in the business? Pay them for work they legitimately do and you have a tax deduction. Up to $5,450 per year won’t be taxable to them.
There are three rules to this: 1 – Have a written job description. 2 – Make sure you (or rather your child) keeps track of the hours they work. 3 – Pay a reasonable wage for the work done.
We take it one step further with our son David. He has certain things that are his responsibility to pay for: entertainment, clothes, etc. So, he had to learn to budget and delay gratification a younger age. Our saying was always to let him go broke at 15, so he didn’t go broke at 35.
If your child works more for your business, or is doing a task that commands a higher wage, that’s great! Even if there is some taxable income for your child, chances are his tax bracket is going to be lower than yours.
And, once you have them earning income, don’t forget to have them set up their own IRA or Roth IRA account.