Updated: Nov 22, 2021
If your child is under 18, you can hire them as an employee and pay them up to $12,400.00, simultaneously save on taxes (if you’re a business owner), AND still claim them as
dependents on your tax return AT THE SAME TIME?🤯
Below are just SOME of the benefits:
- Your child will learn the value and importance of hard work, business resilience, and earning money
- You’re getting them familiar with working the business and in hopes that they are able to one day run it
- You’re decreasing your taxable income (hello tax savings!) [S Corps and C corps still have to pay FUTA taxes]
- The payment is tax free for the child
- You can reinvest their earned income into a 529 account (tax advantaged college savings plan that earns interest) or custodial IRA account
- There is no age limit as long as you can show documented proof (timesheet, job description, etc.) that they are working. For example, even if you have a toddler they can ‘model’ for your company/marketing purposes. Just make sure their income is deposited into their OWN bank account.
If done correctly, not only are you setting up your #KidVestor for success, but also benefiting as well!
If this is something that would interest you, consult a CPA that could help you and your child get set up!
Remember, it's NEVER too early to set your KidVestor up for success!