It is summertime and the kids are out of school so it is a good time to hire them to work for you. The benefits are enormous. Here are six.
- Your child can develop a work ethic
You can teach your child, from a relatively young age, the importance of having a job, having a boss and having responsibilities. She can learn the value of showing up somewhere on time, doing what is expected and performing tasks under the supervision of someone else. And she’ll learn how to dress and behave in a professional environment. All of these are valuable life skills.
- Your child can earn up to $6,300 per year without paying any taxes
This is assuming that she’s not doing any other work or earning other income. In case you didn’t realize, $6,300 is the standard deduction on any tax return, so if she’s not earning more than that…she’s got no tax liability. It’s quite possible that you won’t even have to file a tax return for her either.
- You may not have to pay taxes
As long as your child is under 18 (and you’re a sole proprietor or LLC) you won’t have to pay any social security or Medicare taxes. However, if you’re an S-Corp or C-corporation, you will have to withhold these taxes. Regardless, make sure you’re keeping good documentation of her work hours and the work performed just in case the IRS raises a red flag.
- You can take a deduction! It’s a legitimate business expense as long as your child is at a reasonable age and performing reasonable work that someone else would be paid to do such as:
- Filing
- Data Entry
- Cleaning
- Maintenance
- Answering the phone or any other administrative duties
Not only that but you can still claim your child as a dependent or receive the child tax credit if you qualify.
- You get to spend more time with your kid
It’s kind of nice having her around this summer, isn’t it? Time flies so every minute counts. And she can see you too – in action, with other people, being the boss. You’re not just her parent; you are a real person, a leader, the head honcho.
- You get to take the check out of her hands
Yes, that’s right – out of her hands. As soon as you give her the paycheck, you grab it and immediately stick it in a savings account for her. Because you know she’ll spend that money at the mall or on an Xbox as soon as she can, right? Put the money in a 529 College Savings Fund so that it can grow tax-free and be used for higher education expenses some day in the future. College is kind of expensive, did you hear?