subject: As you can hire your children to help you save on taxes? [print this page] As you can hire your children to help you save on taxes?
Taking your children, your company can teach a great tax savings strategy and the opportunity for your children, business and money.
Pays wages to your children (ages 7 and 17) are a valid business deduction, because they work in good faith, and are fairly compensated.
Your children can have up to $ 5450 (the standard deduction for 2008), before payment of income taxes. Why did you found a deduction for companies toWages to his son, the income that you pay no taxes represents.
Even if your children are under 18, you pay no taxes and national insurance from them. Not have to pay unemployment contributions on them while they are under 21 years. This is a great tax saving which would have to pay taxes each employee terminated.
Even if you pay your children more than the amount of the deduction, you can always go forward. InMost cases are children in a lower tax bracket at six, so they are paid a salary, check the income tax from their lower tax bracket.
Strategy: If you pay your children more than the standard deduction, which may protect additional revenue from taxes, opening an IRA account.
Letting your children, not a red flag with the IRS, but you must register the salaries of their children and servicesCheck the evidence of your tax return. To do this, you should be an attendance list specifying the date, time and services made available for your child and write a payroll service.
Note: You may have heard of "fee for children." Earned income, including wages, to pay for their children, are not subject to tax "kiddie" standard, regardless of age.
Example: In 2008 you can pay your child up to $ 5450 (the amount of standard deduction in 2008) compared to all of youCosts. Suppose that are in the range of 28% taxes and pays its 15-year old son $ 5000 in his office-related tasks.
You will receive a deduction for companies that pay for his son, the $ 1400 (28% saves $ 5000 paid). It also reduces the amount of benefits, fees for self-employment (15.3% = $ 5000 tax savings of $ 765 extra). The total tax savings in this example is $ 2165
From your sonIncomes below the standard value of deductions that do not have taxes on their profits. Also, because your child is under 18, you do not pay Social Security, Medicare or unemployment taxes on him like a normal job.
Action: If you have children aged 7-17, to examine, on the payroll. You must keep time sheets with dates, times and services. You should also write a check to supportWages.
Guided Tour: You need a federal tax on income quarterly (Form 941, state income tax forms) for their children to file (even if the tax is due). In addition, you must submit the Form W-2 for their children at the end of the year.
Sources: IRS Publication 15, Chapter 3, the family of employees.
