Payroll tax deduction and why you should hire your kids
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- Опубликовано: 8 сен 2024
- In this video I'm talking about how to hire your kids. If you are a sole proprietor or small business owner with an LLC or partnership owned solely by you and your spouse you may get some serious tax benefits by hiring your child. The money earned by your child may not be subject to FICA, FUTA or SUTA taxes. Hiring your child may also reduce your taxable income or even boost your tax refund.
The benefits of hiring your child are not only giving them a job and earned income but also the ability to contribute to their Roth IRA or 529 college savings plan.
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TRAVIS T SICKLE, CFP®, EA®, AAMS®, CRPC®, RICP®
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how to hire your child
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TRAVIS T SICKLE, CFP®, EA®, AAMS®, CRPC®, RICP®
CERTIFIED FINANCIAL PLANNER™
Company Website: www.sicklehunt...
twitter: @travissickle
Instagram: / travistsickle
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Sickle Hunter Financial Advisors
1646 W Snow Avenue
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Tampa, FL 33606
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#travissickle
I love it… your explanation is perfect
awesome! thanks for the advice!
Hello Travis, I have a few questions. I have 3 children and a partnership LLC (mom&dad). We usually pay ourselves in the form of a withdrawal. Can we do the same for our children? Or would they need a bank account to deposit funds? In our scenario a fmc is not needed correct? I appreciate your time and expertise. Thank you!
Interesting. Hasn't thought of this before. Cool!
Great video! Thanks!
the title sounds like your sending your kid to work in a sweat shop
alright, I updated it. Don't want anything to do with sweatshops.
This is my 5 video on this topic and by far this is the best one! Thank you for the content. 1 quick question (hopefully you see this) Can I still get the tax deduction if I paid my child in cash or have I made a rookie mistake?
Yes, but just make sure you set it up just like any other employee…employment doc, paying per pay period, etc.
Great info...but how to handle with a S Corp? And can the kids use the money any way other than just ROTH or 529. The 529 counts against them for financial aid for private schools.
Hi. How about the Employer Taxes ? is it exempt as well.
This excludes those in an agriculture business. Could this not be used in such business?
So if the child is paid under the fed and you states standard deduction. You dont file income taxes for the child and there is no SS, MC, then you dont need to do a W2 and 940 correct? As the penatilyt for not filing w2 is a portion of the withholding but there are no withholdings so no penalty correct?
Thank you for this! Does it work for a sole proprietorship? If I am a sole prop, can I still hire my children as W2 employees or do I have to start an LLC?
Did you ever figure this out?
What forms/process do I complete to put them on payroll?
How this works if I set SEP plan for my llc . Do I have to pay my child 20% contribution towards his SEP account?
can it be a parent and step parent?????
Can a parent and a step parent hire the child?
Can you do this as solo proprietor that S corp lapsed
It's not for S-corps.
Can open Roth IRA for her because she is earning income now?
Yes
Can you put your kids on payroll at the end of the year & pay them in one lump sum?
Yes. Pretty sure Mark Koehler has a video on that
Hello thank you for the video how do i enter my child as an employee on my schedule c since my business is sole prop and i i do my my schedule c i paid my kids by depositing the money on their 509 accts but im still not finding out how i file my tax with my kids as my employee in 2022
July 10, 2023
Hi Travis, could I hire my kids as "independent contractors" or "freelancers" and if so, what tax forms do I need to fill out? My kids would be too young to perform any productive work for my business but I actually use them a lot as models for my baby products. So I might as well pay them.
But then they would have se tax
Hi, Can you please help me to set up for my Kids Payroll.
calendly.com/sicklehunter
If my 13 yr old child works and I pay her under $12k, can I still claim her in my taxes.
Yes
What if you hire your 2 year old child as a model for your child clothing line. They cant sign nothing.
The rate you pay will be important. Make sure it’s in line with industry rates.
What paper work makes this legit? Saw w4 in the vid. What about I9? What else needs to be done administratively to seal this up nice and tight?
The paperwork varies, but it's setting up the kid as a legit employee. Same as if you hired anyone else. The only material difference here is that you can avoid taxes.
This should work for s Corp kid 14 yes old.
I want to open up my LLC for baking, I would love to hire my (future) step-daughter. Can I add her as an employee even though my marriage license isn't complete yet? Do I need to have their father as another member of the LLC in order to legally add her to my business?
Great question. You would have to wait because the business must be 100% owned by the parents to have the tax benefit.
@@TravisSickle Thank you so much for the quick response! (Your video was really informative btw) So I can wait until after the marriage license goes through next month and then I would be safe to proceed with hiring her correct? She does have a living mother but I assume I don't need her involved and can just use her father as the 2nd member?
This is gold, thanks Travis!! As you can see my pic I already have a her working .. totally joking! 👍🏼👍🏼
Can you still claim your kids as dependents after you hire them and are paying them ?
Yes, as long as you are supporting them.
Is Dba ok? Also if it’s e-commerce online work like emails and maintaining media accounts and repricing,,, the child lives in different state, and what forms of payment? Do i pay myself in any form? Or it would have to be checks from company name to child?
The setup is just like any other employee. It’s their earned income. Not yours.
It would be direct from company to child. Since it’s a paycheck. Then contributing to Roth. It’s important they work and are setup just like employee.
@@TravisSickle ok, reason i ask about payment method, is because i believe i saw somewhere else, you don’t submit anything just write it off as outside labor? Thanks for response
Yes and no. Since you don’t have to withhold payroll or federal if you keep the amount below standard deduction it’s a check for 100% of gross. But you want to document in the event of an audit. That means just keep track of time card, employment agreement etc. similar to all your other business expenses. You just keep the records in the event of an audit.
@@TravisSickle thank you for answering in the clearest Form, thank you
Hi, so if you pay your minor kid $12,000, which is less than std deduction. Even though your child doesn't have to pay taxes, that child is now make too much money for 2020 threshold of 4300.
Therefore you can no longer claim that child as dependent on your tax return. Subsequently, you won't be able to get the $2000 child tax credit, is that right?
You’re confusing the child tax credit with dependent relatives.
@@TravisSickle Yes, I realized that after I posted the question. Thank you so much for clarifying it anyway.
You can get it because you support your child. Even if they earned more and files their own return you could get it. That will follow a support test.
Can the children be contractors who work for the LLC and get a 1099?
I’m wondering the same
Yes, but then the child will have payroll taxes.
@@TravisSickle Even if the payments are under the $12,400 threshold for the year?
@@ayarborough12 As an independent contractor you can't dictate how the individual does their work. That's highly unlikely when dealing with a minor. And while in either case, the standard deduction may eliminate the federal tax, in order to get the self-employment tax / FUTA waived the child has to work for the parent. Independent contractors are not employees so that's not the same relationship status. The law doesn't exempt children from payroll tax, it exempts their pay when the pay is from a business entirely owned by the parent.
Can I do this for a sole proprietorship, and if your child is 12 years olde.
So you can give kid 14 year old part time w-4 form?
Julia L yes
Thx!!