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My sons, 12 and 17, worked for me last summer and were paid weekly. (Of course the older one made more since he was old enough to really assist). In order to claim that as a deduction on my taxes, is there anything special I need to do? Where do I list that on my expense form, any special category? Any other paperwork need to be filed??
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Hiring Own Children
Yours is a complicated question. You should have written out a job description, kept records of when they worked, and what you paid them. The work they did had to be directly related to your business, not household chores. You need an EIN. You should have filed the quarterly Form 941 to report wages not subject to Social Security. If the total amount you paid out was less than $4,000 you can instead file Form 944 now. Lastly, file Form W-2 and W-3. These are forms showing you paid wages - no taxes are due because your children are under age 18.
You claim their wages on Schedule C. Put it on line 27 Other Expenses as "Payment to Own Children for Work".
I've got a chapter on hiring employees (including own children) in my 2010 Family Child Care Tax Workbook and Organizer. -
Currently writing contract -TOM
I'm live in Florida and am trying to figure out how much I should pay my son who is 13. I know that he doesn't have to pay taxes as long as his wages stay under $5700 but I'm confused on the significances of making less than$4000. I just want to understand the law to the fullest. ThanksComment
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hiring own children
There is no significance to the $4,000 number. If a child under age 18 earns less than $5,800 in 2011 he or she will not owe any federal income taxes.Comment
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what type of jobs do you have them do looking for ideasComment
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work
cleaning, helping play with the children, setting the table, washing dishes, taking out toys before the children arrive, putting away toys after children are goneComment
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Does your child have to be above a certain age in order to pay them and use it for taxes?Comment
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hiring own children
Federal law says there is no minimum age your child must be to pay them to work for you. However, you state may have child labor laws that affect your ability to hire your own children under a certain age.Comment
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paying own children
Tom, when I have my taxes done over the last several years, my preparer keeps telling me that I need to pay my children less than $599. Why is this, can I pay them more, just keep accurate records? Where does the $5,700 fit into this?Comment
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Here is a link to Tom's blog where he has lots of VERY useful advice! Well worth the read!! http://www.tomcopelandblog.com/.serv...r+own+childrenComment
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paying own children
Your tax preparer is saying that if you pay your child $600 or more you must file a Form 1099 to report the payments to an independent contractor. But, when you hire your children to do work for your business, you must treat them as an employee, not an independent contractor. Therefore, you would never file a Form 1099. Therefore, there is no reason to pay your child less than $600. The $5,800 number (not $5,700) comes into play when you pay your own children who are under age 18. If they earn more than $5,800 they will have to file a federal tax return and report the income. Thus, they may owe some federal income tax. If you pay them less than this amount, they don't have to file a federal tax form and won't owe federal income taxes.Comment
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Get a real summer job for your kids
If you're looking for real summer employment for your kids, I would recommend going to a summer employment agency that has a lot more resources. Just by looking at this post, I can tell that you haven't looked a few other companies. I have my own small accounting business and i wanted to have my son work for me but then soon realized that it wasn't going to be beneficial for him at all since I wasn't going to be paying him much and there wasn't much work for him around the office. After a few simple errands I wanted him to learn some discipline by getting a real job. It was the best decision for him since I didn't want him wasting his summer.
Good luck getting your kids a summer job!Comment
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