Are you paying your children from your business ? Dont miss this valuable tax strategy.

May 23, 2023

One of the oldest and least discussed tax strategies is to pay your children from your business. As we all know, having children is expensive! From the basics like food, clothing and healthcare to the sports, classes and parties, childrens care runs in the thousands. So why not benefit on both fronts? Take a tax deduction for your business and get some cash out of your business to cover your childrens expenses. I love this strategy!

Uncincorporated or self employed business owners are eligible for this deduction. There is also a workaround for S Corporations if you are interested in deploying this strategy and have an S Corporation for your business structure.

You can pay children as young as five but be reasonable about how much you pay for their duties. I also recommend keeping their payment under the annual single standard deduction limit so between $10,000 and $12,000 seems reasonable.

This payment is free from payroll taxes and income taxes and it reduces your business taxable income. That’s a lot of savings right there.

If you dont need the money to cover family expenses then another useful step is to invest the monies into a ROTH IRA for your child. Financial advisors can help you with this piece.

If you have any questions about how to implement this strategy, please reach out to me and let’s discuss. There are so many other strategies like this that we teach in our one on one and group sessions. Take advantage of every tax deduction to which you are entitled under the law so that you keep more of your hard earned money. Our responsibility as business owners is to support our families, the families of our team members and to give back and build our communities.


Download Your FREE Tax Chart

You have Successfully Subscribed!

Download Your FREE Pension Chart

You have Successfully Subscribed!