Save money, save money and save some more money. This is what we have been hearing ever since we were kids. And why not when the law is allowing you to?
Hiring kids between the ages of 7 to 17 not only makes them smarter but you too. You could be laughing all the way to the bank.
As a rule, every child has a standard deduction of $4,570; thus it follows that children are exempted from paying the first $4,570 in income. Now, if you have a kid working for you and you fall in the 30% bracket, you can coolly save $1450 in taxes after spending the whole $4570 on your kid. Nice stuff right?
You needn't have to pay the social security taxes on 'wages' paid to kids as they come out of sole proprietary and not from business corporations. In tax saving exercise, you are not free from paper work. Form 941 is to be submitted four times in a year. This is basically a form used to withhold finances generated by an employee; however, for a child there will be no withholding. Further, at the end of the year, you will have to issue a W-2.
Kids are legally allowed to be hired as employees by their parents when they are 7 years old, provided that the work assigned to them is not mentally and physically challenging, and is within their means to achieve it. The number of hours and the type of assignments completed by the child should be recorded on an Excel Sheet. As long as the pay and the work given to the child are reasonable, you can avail of the tax deduction.
Moreover, the wages that you are paying goes into your hands and not theirs. This means that you are the true owner of
Ultimately, make sure that your kids don't spend more than 50% of their expenses, if they do, then you lose the itemized deductions.
You know that you don't want to make your kid work a bit too much. Let the work be reasonable. Let him enjoy and you can enjoy yourself too.
Find more about http://taxdeduct.net'>Tax Deductions
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