Hiring your teenagers to save on taxes

Discussion in 'Ask An Owner Operator' started by Transportacion R&R, May 1, 2020.

  1. Transportacion R&R

    Transportacion R&R Light Load Member

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    Do any of you hire your teenagers in order to save on your taxes? Tax payer filing single standard deduction is $12k, meaning you can pay your kid $1000 a month to do some clerical work around your home office and have him or her not pay taxes on it, meanwhile, your business reduces it taxable income by that same amount. I'm curious if anyone is doing this and if so, are you 1099 - MISC them??
     
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  3. Bean Jr.

    Bean Jr. Road Train Member

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    You are supposed to claim your dependents' income. So it sounds like a nice deal, it probably won't help.
     
  4. Accidental Trucker

    Accidental Trucker Road Train Member

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    not as far as I know.
    But if you DO hire them you’re on the hook for 15.something % in payroll tax, which sours the scheme a good bit. Plus any other required crapola such as workman’s comp, etc.
     
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  5. Ridgeline

    Ridgeline Road Train Member

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    Smart**** that's what may neighbor does, he hires his sons who are 23 to do work in his shop, they pay rent and pays them $1100 which works out for taxes on a 1099,
     
  6. dibstr

    dibstr Road Train Member

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    That depends on how your business is structured. If you are the sole owner or both parents form a partnership and the child is under18, you do not need to deduct from their pay or, pay the employer contribution for SS or Medicare payroll tax.

    If you are incorporated or have a partner other than your spouse or the child turns 18, then you do. When the child turns 21 you have to pay the federal unemployment tax. Workman’s comp I’m not sure of, but it would go under a state’s laws. Many states have a number of employees required (Usually 3-5) before WC is mandatory.
     
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  7. Accidental Trucker

    Accidental Trucker Road Train Member

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    Thank you for the detailed clarification. I hate being “somewhat right”.
     
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  8. Midwest Trucker

    Midwest Trucker Road Train Member

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    I’d they work, pay them. If not, don’t.
     
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