Hiring your young kids for your business advantag
#8063173
01/29/24 12:23 AM
01/29/24 12:23 AM
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Joined: Feb 2020
Posts: 8,975 Indiana
Providence Farm
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Ok so I just learn about this I never thought about it.
You can hire your kids to work for you and they won't have to pay taxes on it if it's less than $ 13,800 In 2023 If they are under 18 you don't have to pay paroll tax or ss on them. And get it as a deduction for business expenses.
Now they have earned income so you can open them a roth and put in up to the amount they made or up to the 7k a year limit. Remember this will be not taxed when made , on growth or when with drawing when they retire. Just one year of 7k at 10% for my 13 year old and .when he is 60 that would over 600k. If I did my math right WoW. That is if you only maxed it out one year. Looks like a huge win setting the kids up for the future for just a little book keeping . Teaching them about work and paying them for their labor . Convenient timing because just last week I was telling my wife the boys need paid for the farm work they do that generates income. Every task they do is one we don't have to do or to hire someone to do so they should get paid for it and it will teach work = reward. Never dreamed something like this was possible. I need to look into it more but thought I would share it for others that may not know about things like this. This is how people get rich and family build generational wealth.
So did some math . The boys spend a few hrs a day feeding, watering, cleaning stalls, milking, collecting eggs and such a day. Some days it's more like butchering and honey extraction day some days less. So say two hrs a day being conservative. $15 an hour seems reasonable . 2 hrs a day 7 days a week 365 that's over 10 k a year so yes easy to max out a Roth an still have some money to show for the work. Man my farm Is going to have to generate a lot more income there is no way I can afford that now but I the possibilitys.
Last edited by Providence Farm; 01/29/24 12:42 AM.
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Re: Hiring your young kids for your business advantag
[Re: Bear Tracker]
#8063299
01/29/24 09:41 AM
01/29/24 09:41 AM
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Joined: Jan 2007
Posts: 5,221 Northern Minnesota
BernieB.
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I am not sure of the number anymore but you are correct. When we were kids we would get checks from the business but signed it back over to the family. Had it for a few seconds. LOL Guess they never got audited!
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Re: Hiring your young kids for your business advantag
[Re: BernieB.]
#8063307
01/29/24 09:48 AM
01/29/24 09:48 AM
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I am not sure of the number anymore but you are correct. When we were kids we would get checks from the business but signed it back over to the family. Had it for a few seconds. LOL Guess they never got audited! Wouldn't matter if they did as long as the kids worked for it and he's and pay were loged and keep track of w2 filled out ECT. Nothing illegal about it or investing your kids money for them.
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Re: Hiring your young kids for your business advantag
[Re: jalstat]
#8063383
01/29/24 11:32 AM
01/29/24 11:32 AM
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You can also gift them so much money a year but I don’t know how it works for taxes Yes that is a way to transfer money to avoid taxes when you die to not pay as much inheritance tax. Or used to be anyway. I believe that inheritance tax rules have been changed, but I know my great aunt And uncle gave my dad aunts and uncle 10k several years in a roll in stock before the laws change to help with the death tax or some such. I was not involved so don't know the fine points. Now I have been have money for to the kids brokerage account s each month. But this is is exciting to me because of the tax savings and that I won't have to worry about them becoming tempted to use the money before retirement because they won't be able to get to it. Also the amount is small enough I can afford it at least some what and I can see how amazing it will grow and benefit m even my great grand kids and beyond as lond as their parents make sound decisions. It's very appealing to think how I can be the one great grandfather that did something to move the familys economic class up for generations with such small amounts.
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Re: Hiring your young kids for your business advantag
[Re: Providence Farm]
#8063392
01/29/24 11:48 AM
01/29/24 11:48 AM
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BernieB.
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[quote=BernieB.][quote=Bear Tracker]I am
Wouldn't matter if they did as long as the kids worked for it and he's and pay were loged and keep track of w2 filled out ECT. Nothing illegal about it or investing your kids money for them. you might want to read his post again.
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Re: Hiring your young kids for your business advantag
[Re: BernieB.]
#8063456
01/29/24 01:15 PM
01/29/24 01:15 PM
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[quote=BernieB.][quote=Bear Tracker]I am
Wouldn't matter if they did as long as the kids worked for it and he's and pay were loged and keep track of w2 filled out ECT. Nothing illegal about it or investing your kids money for them. you might want to read his post again. He never said they didn't work for it or what the family did with it . It could have been invested, or used for things the kids wanted to do. School lessons for their interest ECT. I never understood the automatic assuming that people are doing something wrong ? Seems common people wanting to make others in the wrong
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Re: Hiring your young kids for your business advantag
[Re: 70sdiver]
#8063788
01/29/24 08:17 PM
01/29/24 08:17 PM
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That works as a sole business owner but not for an LLc Works for my farm but I read a single operator llc it works also but I can't say that info was correct but I did see it in more than one place.
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Re: Hiring your young kids for your business advantag
[Re: bblwi]
#8063936
01/29/24 10:08 PM
01/29/24 10:08 PM
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It may be a good idea to pay the SS tax for those minors as the bend point percentages are higher for lower incomes and the longer there is earnings before filing to claim the wages are computed from those years to current levels. Salaries, wages almost never go up as much as the projected raises would be to be comparable. SS and Medicare are also deductable as a business expense.
Bryce Good points but they are 11 and 13. I'm 43 and don't believe I will see the SS I'm paying in. Something tells me it won't be there for them and not to plan on it. But it is definitely something to add into the equation.
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Re: Hiring your young kids for your business advantag
[Re: Providence Farm]
#8063956
01/29/24 10:30 PM
01/29/24 10:30 PM
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Scott__aR
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Depends on your business/es ... best to talk with your tax advisor about the pros and cons for your situation.
Megapredator ... top of the food chain! Member of WTA Member of MTPCA Member of NTA
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Re: Hiring your young kids for your business advantag
[Re: bblwi]
#8064046
01/29/24 11:51 PM
01/29/24 11:51 PM
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If you don't believe SS and Medicare will not be there in 22 years when you are eligible then you will want to have a huge stash of assets to cover medical expenses etc. and so will your children. People have complained and questioned SS for 80 years and it is still here and will be for some time. I know many dislike social programs but our SS system is probably the most successful social system created in the world.
As much as some politicians rail against it when push comes to shove they blow hot air. If you were using the $15 per hour as a cost you could cut that down to the level where paying SS, Medicare and a ROTH would not cost you any more then the $15 per hour or whatever wage you choose. All of those would be tax deductable for your business. One way to get a tax break on a ROTH that is not a tax saving investment initially. Also when you pay wages to minors or children they can buy their own bikes, clothes etc. and they are purchased with wages that have already lowered taxes.
Bryce They are talking about raising the age for SS again they have dipped into it to many times and pay out to people that never paid in. If it's there great but planning on it is being quiet optimistic in my opinion. And why planning ahead for my kids will hopefully put them in a place they won't need it. I sure would rather have what I paid in over the years in a Roth. It would be there and I could pass it on to my kids and I would get a mich better return. But instead I'm paying for others many that didn't produce a thing. Great redistribution of funds. Sure it great for mom since she got cancer and can't work and many others in her boat. And why I'm ok with what I pay now looking at it like I'm just paying what's going to mom. That way I feel like I'm getting some benefits out of the money stolen out of my check. If I do retire at , 57 I won't have insurance at all unless I pick up a high deductible plan. Hopefully I will be in good health but there is no guarantee I will even live out the week. I do know nothing goes like I plan so plan for that .lol. I could always get rich fur trapping if I quit my job. Seriously though as will probably be there but in a much reduced form than it is today and near useless. Add in I may have to be 80 to draw it I'm not planning on it but if it's there it's a bonus.
Last edited by Providence Farm; 01/29/24 11:54 PM.
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Re: Hiring your young kids for your business advantag
[Re: RockCrick]
#8064240
01/30/24 09:47 AM
01/30/24 09:47 AM
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I’ve seen stories online where people use their infants in an advertisement for their business, pay them and start the roth contributions when they are a month old. Not sure if it’s just bogus internet info though, probably is. I bet it's true. Child actors get paid so why not.
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Re: Hiring your young kids for your business advantag
[Re: Providence Farm]
#8064297
01/30/24 11:25 AM
01/30/24 11:25 AM
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Joined: Dec 2009
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Leftlane
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Unless I had a huge project going on, I always liked the idea of my boy and foster sons working for others. To me, it would help them to understand the expectations of an employer and be a life lesson. They already knew my expectations because I have a broad foot and a narrow mind. Everything I did back then was ag exempt.
“What’s good for me may not be good for the weak minded.” Captain Gus McCrae- Texas Rangers
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Re: Hiring your young kids for your business advantag
[Re: Leftlane]
#8064707
01/30/24 09:58 PM
01/30/24 09:58 PM
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Unless I had a huge project going on, I always liked the idea of my boy and foster sons working for others. To me, it would help them to understand the expectations of an employer and be a life lesson. They already knew my expectations because I have a broad foot and a narrow mind. Everything I did back then was ag exempt. They have a yard job this summer, they are to young yet to get an actual pay check job so odd jobs and chores it is. I am not home enough to take them around to do anything on a regular base. Guess they could offer traping service during the session. Get them acd minded. Probably as good at trapping and most with a hand full of years at it . Apparently I can't open a Roth for them with my Edward Jones guy because they won't open a custodial Roth for less than 5 k. They worked enough to do that but I didn't claim I paid them as much as they worked so since they didn't earn 5 k they don't have the opportunity to open an account there for the amount they earned. I called vanguard lady said no minimum. I was driving and didn't have all the info I needed to open accounts so have not yet. What to check with fedility as well since I have one of my 401s there . That rubbed me the wrong way . I understand having minimums to open accounts but for a kids retirement account that will grow and bee there 40 years not so much. I believe my accounts there will not be getting any more monthly auto deposit, or a 401 roll over I was looking into. Don't think I will close the accounts completely since what's there are front load mutual funds and selling them to pay fees somewhere else doesn't make since but that fund limit will cost them all my future investments.
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