Tax advantages of hiring your child at your small business - Crawford Ellenbogen

As a business owner, you should know that you can save family income and payroll taxes by putting your child on the payroll. You may be able to turn high-taxed income into tax-free or low-taxed income by shifting some business earnings to a child as wages for services performed. In order for your business to deduct the wages as a business expense, the work done by the child must be legitimate and the child’s salary must be reasonable. You also may be able to achieve Social Security tax savings (depending on how your business is organized) and even make retirement plan contributions for your child. Contact us if you have any questions about the rules in your situation.