Put Your Kids to Work!

If you own a company that is a sole proprietorship, or you and your spouse are the sole partners in a partnership, then you can employ your child under 18 years of age without paying social security or Medicare taxes.  They are also not subject to FUTA tax.  This will put a little extra spending money in their pocket and will allow you a business deduction for labor at the same time.

 

Keep in mind, though, your child will still be subject to income tax.  The child can still take a standard deduction which allows the first $6,100 of earned income to be tax free.  In the case of Michigan, an individual claimed as a dependent is still eligible for a $1,500 exemption for the state return.  Depending on how much they will be making, they may have a small amount of income tax due but not having to pay social security or Medicare taxes will be a big save for both you and the child!

 

This is a guest post by Emily Fishwick of Numerico, PC.

Note that for liability reasons, Demorest Law Firm, PLLC recommends establishing an LLC or corporation, rather than a sole proprietorship or partnership, but you should always consult a tax advisor regarding the potential tax consequences of any business.

Recent Posts
Categories
Categories
Archives
Archives