Tax Benefit of Employing Children [Video]

There are several tax benefits for employing children.

If your child is under the age of 18 and works for your company, your child’s wages won’t be subject to social security tax, Medicare tax, or federal unemployment tax.

If your child is at least 18 but under the age of 21 and works for your company, your child’s wages won’t be subject to federal unemployment tax.

There are several caveats:
• Your business must be either:
(1) a sole proprietorship or
(2) a partnership in which each partner is a parent of the child
• Your child must do actual work for your business
• You must pay the child actual wages
– Buying them pizza for dinner doesn’t count, and yes there was a taxpayer who tried to deduct that

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