Children: All for the Sake of the Tax Breaks

tax scam

Hiring your kids at your business can have many benefits from teaching kids valuable life skills to getting some awesome potential tax breaks. First, payroll and unemployment taxes may not apply. If you run a single-member LLC, a spousal partnership, or a sole proprietorship, the IRS doesn’t require children under the age of 18 to pay Social Security or Medicare and those under 21 don’t require unemployment taxes on their behalf. Wages that you pay your kids are also considered a tax-deductible business expense – lowering your tax liability. Since these tax benefits can be quite substantial, be prepared for potential IRS scrutiny. Make sure to keep adequate documentation and payroll records to prove that your children are participating in the business. Your children, despite potentially being minors, may also have to file a tax return if their earned income exceeds the standard deduction. If you have tax trouble, contact our office at 816-524-4949 or check out our website at Hoorfarlaw.com.

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