If you own a trade or business and have a child under 18 that are capable of providing services, hiring him could provide a tax benefit for both you and the child. Payments to a child under age 18 are not subject to social security and medicare taxes if the business is a sole proprietorship or a partnership that both parents are the only partners. The payments are also not subject to federal unemployment tax.
Wages to a child are subject to social security , Medicare, and FUTA taxes if he or she works for:
Wages to a child are subject to social security , Medicare, and FUTA taxes if he or she works for:
A corporation, even if it is solely owned by the child's parent,
A partnership unless each partner is a parent of the child,
An estate, even if it is the estate of a deseased parent.
If you own your own business and have minor children that could work for you, now would be a great time to plan ways to minimize taxes for both you and your children.
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