Turn Paying Your Children Into a Tax Deduction

Owning and running a business can be rewarding and challenging. Over the years we haven’ticed that many business owners utilize their spouses and children. If you have children old enough to perform a task, you know what we mean. Not only is it cost effective to have your children help but many times it’s a way to spend quality time together and to teach your children values like hard work and helping one another.

What many people do not realize is that while you’re spending time with your children and teaching them, you can also create a legitimate tax deduction. This means that you’re allowed to pay each child a certain amount each year for helping you in your business. There are some specific guidelines you must follow. You must pay them according to their age and you must pay them according to the task performed. For example, you cannot pay the five year old two thousand dollars for emptying the trash in the office one time. There are also specific rules on how to keep track of what each child does and how you can pay them. You must keep a log of the day, time, activity, and how much you paid them.

Let me go forward with this content page. Although there are specific guidelines to follow, there is a wide range of what you can pay your children to do. We’ve seen construction workers take their children to help with clean up. We’ve seen realtors have their children help deliver flyers. We’ve seen day care providers have their children help with cleaning and preparation. We’ve even had a vet pay his daughter to come in and help feed and care for the animals.

Another thing to realize when paying your children is sometimes their wages aren’t subject to Income, Social Security, or Medicare taxes, meaning you pay them 100% of their wages with no taxes taken out. This happens if you meet the following guidelines: If you pay your children from a partnership or a sole proprietorship, those wages aren’t subject to Social Security or Medicare tax. They make less than the standard deduction for single individuals; those wages aren’t subject to Income Tax. They’re under eightteen years old.

Paying your children is another way of deducting money you’re already going to pay out. How many times have you told your children that if they help you with a task you’ll buy them that pair of designer jeans or pay for Little League? Instead, pay your children so it becomes their money and a tax deduction. Then you can have them put their money in a savings account, pay for school fees, clothes, etc. You undoubtedly want to pay your children to help you. Why not put in a little more effort and make it tax deductible?

For more information on how to pay your children and to learn more about other tax deductions you may qualify for, visit http://avoidbeingaudited.com.