There are over 95 tax strategies you can use for 2018. Taxes have changed much more than most people know. Ignore it at your own peril!
Let’s look at how the Trump Tax Plan has changed how you claim deductions and exemptions for your child.
Usually, most people are looking for ways to continue to claim their child on their tax return. You pick up an exemption in most cases and that means less tax. Or, at least, that’s how it used to work.
The child exemptions are gone. You can get, for a while anyway, a child tax credit. But if your child is older and disabled or older and in college, you won’t get an exemption or the regular tax credit. You may get a small $500 tax credit instead if you’re lucky.
There is a better way.
If your child has earned income, or even better if it is earned income from your business, he or she can file a tax return personally. The new standard deduction is much bigger, $12,000. So, if you pay your child from your business, you’ll get a deduction for the wages paid from the business and your child probably won’t pay any tax.
With an IRA, your child could make $17,500 before there is any income tax due. Even after that, the child’s rate is probably much lower than yours.
So, instead of giving your child money, put them to work!
We give our clients these three rules about employing minor children:
- Have a written job description,
- Track hours or project, and
- Pay a reasonable salary or hourly wage.
Once your child has earned income, have him or her start to pay for some expenses. In this way, after tax expenses effectively become before tax expenses.
You may even find that with a job in your business your child will have higher education costs that become deductible. For example, maybe your son or daughter can take over the social media accounts for your business. That’s a legitimate job, something that’s needed in today’s world and can also justify a higher wage. Plus, any college classes that would help with the social media account (graphics, IT, coding, and writing, to name a few) would now be deductible expenses for the business.
There are over 95 tax strategies for you to use in the Trump Tax Plan, plus real life examples of how my clients are putting these strategies in place to WIN BIG!
You can, too! Pick up your copy of the “First Look” Taxmageddon 2018 at: https://www.ustaxaid.com/shop/taxmageddon-2018/