Hiring Your Kid: Information

-Legal (unless you own a hazardous business).

-Shift parents’ higher income taxes to a lower income tax for the kids which is 0% “The Tax Cuts and Jobs Act’s”. This means if a kid makes $12,000, since all of that is deductible there is no tax on this earned income. As the owner of business, this is also a great way to reduce the taxable income.

-Allows for Roth IRA, $6000 contribution from age 15-18 will result in 496,295 of tax free retirement money at 7% annual rate of return!

-You will be able to shift parents’ higher income taxes to a lower income tax for the kids (0%) thanks to “The Tax Cuts and Jobs Act’s”. This means if a kid makes $12,000, since all of that is deductible there is no tax on this earned income. As the owner of business, this is also a great way to reduce the taxable income.

-You may or may not have to pay employment taxes, it depends on the type of business you have.

- It has to be a real job like cleaning, filing, clerical work

-Reasonable Wage: Not $50 dollars an hour for picking up trash, but social media marketing could justify a wage like that.

-If your kids makes $12,000 dollars a year, make sure that you still contribute to over half of their own support. Or else in low income areas they may no longer be considered a dependent.

-$6700 dollars of kids income is protected regarding FAFSA meaning if parents earned it they would receive less financial aid but it kids earned it does not affect the calculation. It is important to look into this when your kid is near college age.

For more help or advise reach out to frontdesk@valueview.net