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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Posts: 9,041 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: 5,252 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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