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Children In Your Home Business
submitted: Jul 19th 2008 |
by: TheTAXpert
Total views: 5 |
Word Count: 390 |
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Take home pay! What all of us work for, right? Well, what about "keep home pay?" That is what you can create if you hire your children in your business. Not only will they by getting money to work, but it will be from your business so it will stay in the family. In addition, it can provide substantial tax benefits for you and for them now and in the future. So, needing some help in your business? Look first to your children.
Worried about how to report their income? It's simple! You just treat them the same as any employee, and report their wages on payroll Form 941, line2. You can get more help below if you need it. Remember, if your child makes enough according to IRS guidelines to require Federal and/or State income tax witholding, then you will have to record that as well. But it is a great way for you to add business expense, which is deductible to your business, while helping your child earn some money.
Now, here is where the benefits really add up. If your child is still an exemption on your tax return (translation - Mom and Dad still provide over half of their support) gets to earn $5,350 and not pay any taxes. Also, here's a chance to put away some moolah for their future - you can establish an IRA for your child and put away up to $4,000 per year tax free. That's tax free for your child, and tax deductible for your business as employee expense. You give them a W-2 at the end of the year and do a simple tax return. If you stayed within these guidelines, there should be no taxes due for your child. The great part is that you have saved 15.3% FICA and Medicare taxes on $9,050 from your business by giving it to your child. Net business savings? = $1,385.00. Investing into your child's retirement? = Tax free . Knowing how to do it right? = Priceless!
Debbie "The TAXpert" Cumberland. You may feel free to distribute this article provided you do not change it in any way, and include the author bio and links at the bottom of the article.
About the Author
Debbie "The TAXpert" Cumberland has been helping clients save money on their taxes for over 25 years. She has written a Mini-course available to your free: "TAXpert Tips Online". She also is the author of "TAX Savings: Key to Maximizing Profits She'll help!
Article Source: Unique Financial Articles
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