Hire Your Kids - Tax Free!
Want $13,850 TAX FREE?
This tax strategy is getting a lot of attention thanks to social media.
However, you need to do it properly!
Here are the basics:
If you have children UNDER the age of 18 (17 or younger)…
…you can pay them $13,850 in 2023!!
And there is NO TAX!
NO Self Employment tax (Social Security or Medicare tax)
No Federal tax
(side note: some states have lower thresholds for this than the Federal...so check limits in your state)
No Unemployment tax
AND…
…it’s a $13,850 business tax deduction for you!!
So how does this work (super simplified)
IRS allows a Sole Prop or LLC to pay children under 18...
...you can do so from an LLC taxed as an S-Corp also...but there are more steps.
This also works for Grandchildren...but like the S-Corp...few extra steps.
BUT…this strategy is LEGIT!!
And the best part?
Now your kids have earned income!
Which means now they can fund their own ROTH IRA!!
Soo for your kid, the money goes into the ROTH IRA...TAX FREE
Money grows until they are 60...TAX FREE
They pull the money out of ROTH IRA...TAX FREE!!
Interested? Ok...now for some a CRITICAL REQUIREMENT:
This is NOT a tax scam…
…your kids need to actually be doing the work you say they are doing.
Make sure the work is age appropriate.
IRS might find it hard to believe your 5 year old is doing all your bookkeeping each month.
AND...document what they are doing, hours, pay, etc.
There are important procedures for this strategy...so confirm your accountant knows how to properly implement this.
For example...if they try to give your kid a W2 or 1099...
RUN!... They do NOT know how to do this properly!!
My team can help you!
Best
Pat
Disclaimer: this is meant to be educational only. This is not advice for your specific situation. Please consult a qualified tax professional before making changes to your tax strategies.