5 Steps to Hire Your Under-Age-18 Child for Tax Savings: A Double Win 🤑👨👦
As a business owner, have you ever considered hiring your under-age-18 child to work in your business? If not, you might want to start. It’s a simple strategy that can benefit your family and business, generating tax savings for both. Here are five steps to help you get started:
Step 1: Check Your State Laws Before hiring your child, check your state’s child labor laws to ensure your child is eligible to work.
Step 2: Determine Your Child’s Role. Determine what role your child will play in your business. Will they be performing administrative duties, cleaning, or handling customer service? Make sure the duties are age-appropriate and not hazardous.
Step 3: Set a Reasonable Wage Set a reasonable wage for your child’s services. The wage should be comparable to what you would pay a non-family member for the same job.
Step 4: Keep Accurate Records Record your child’s work hours, duties, and wages paid. This will help ensure compliance with child labor laws and tax reporting requirements.
Step 5: Reap the Tax Benefits By hiring your under-age-18 child, you can enjoy tax savings for your family and business. The wages paid to your child are exempt from Social Security and Medicare taxes (FICA tax) and FUTA taxes. Additionally, your business can deduct the wages paid, reducing taxable income.
Don’t wait to take advantage of this tax-saving strategy! Book Your Free Tax and Financial Assessment today with Palma Financial Services to learn more about maximizing your tax benefits and achieving your financial goals. 🤑💰