HIRE YOUR KIDS FOR HUGE TAX SAVINGS
BONUS: FANTASTIC WEALTH TRANSFER TOOL
- Deduct up to $15,000 in 2025 per child or grandchild; your business hires
- Tax-free income to the child or grandchild if they have no other income
- If your child makes a $7,000 IRA contribution in 2025, they could earn up to $22,000 tax-free
- While they would not get a deduction, your child or grandchild could contribute $7,000 into a ROTH IRA annually.
- If the ROTH is not distributed till after age 59 ½, it is an incredible wealth accumulation tool.
Determine If You Qualify for Hire Your Kids Tax Savings
Why hiring your children may be a great idea for many reasons
Personal Development & Skill Acquisition
Hiring your kids is an excellent way to impart essential business skills.
Whether it’s problem-solving, hard work, discipline, financial literacy, goal-setting, or interpersonal skills, real-world experience is invaluable.
This can benefit their career prospects in the long run and foster entrepreneurial instincts.
Asset Transfer and Wealth Building
Another added benefit of hiring your kids is the opportunity to transfer assets.
For instance, the wages you pay to your children can be deposited into a savings account under the child’s name, a Coverdell Education Savings Account, or a Roth IRA, allowing parents to transfer wealth or provide college funding without incurring gift or estate taxes while preparing their children for future financial needs.
Best practices to follow when hiring your children
There are several best practices to ensure you receive the maximum tax benefits of hiring your children without getting into trouble with the IRS, including:
- Keep payroll records that detail hours worked, wages earned, and taxes withheld.
- Deposit wages into a separate bank account, Roth IRA, or Section 529 college savings plan for your child.
- Separate personal and familial tasks from business duties.
- Comply with child labor laws and all applicable labor laws.
- Ensure your child files a tax return.
Succession Planning
There are several best practices to ensure you receive the maximum tax benefits of hiring your children without getting into trouble with the IRS, including:
- Keep payroll records that detail hours worked, wages earned, and taxes withheld.
- Deposit wages into a separate bank account, Roth IRA, or Section 529 college savings plan for your child.
- Separate personal and familial tasks from business duties.
- Comply with child labor laws and all applicable labor laws.
- Ensure your child files a tax return.
Note that FICA tax obligation varies based on business type
It’s worth noting that applicable taxes can vary based on your business type.
- If your child is under 18 years old, they do not have to pay FICA taxes as long as you either have 1) a sole proprietorship owned by one of the child’s parents, 2) a partnership where each partner is a parent, or 3) an LLC taxed as one of the first two structures.
- If your child is under 21 when working for your sole proprietorship or partnership, they are exempt from FUTA taxes.
If your business is taxed as a C or S corporation, partnership (not as described above), or estate. In that case, your child’s income is subject to income tax withholding, Social Security, Medicare, and FUTA taxes, regardless of age. The solution
Best practices to follow when hiring your children
There are several best practices to ensure you receive the maximum tax benefits of hiring your children without getting into trouble with the IRS, including:
- Keep payroll records that detail hours worked, wages earned, and taxes withheld.
- Deposit wages into a separate bank account, Roth IRA, or Section 529 college savings plan for your child.
- Separate personal and familial tasks from business duties.
- Comply with child labor laws and all applicable labor laws.
- Ensure your child files a tax return.
IRS tax rules to follow when hiring your children
Though you can receive many tax benefits when hiring your children, you must be vigilant to maintain compliance with labor laws and IRS requirements. Here is a brief overview of the IRS’ tax rules you must follow:
- Rule 1 – Bona Fide & Legal: Your child must be a bona fide employee, and you must comply with the same legal requirements as when hiring an unrelated employee. For example, this would include completing your child’s IRS Form W-4 and USCIS Form I-9 and filing a W-2 for your child every year.
- Rule 2 – Ordinary and Necessary: Your child must be paid for services that are common, accepted, helpful, and appropriate for your business, like answering phone calls, designing your website, or cleaning your office. You may not deduct payments made to your child for personal services like babysitting.
- Rule 3 – Reasonable Compensation: Your child’s compensation must be reasonable and comparable to what you’d pay an unrelated employee for performing the same tasks.
Hiring your Kids is just one of our tax planning tools.
Here’s how our in-depth tax planning process works.
Initial Consultation
We start with a one-on-one consultation to understand your financial goals and tax situation. This helps me get a clear picture of where you stand and sets the stage for building a tailored plan that aligns with your needs.
In-Depth Financial Review
I then conduct a thorough review of your finances, analyzing income, expenses, investments, and existing tax strategies. This step reveals opportunities for savings and improvement, forming the foundation for a successful tax plan
Tailored Tax Strategy
Next, I design a personalized tax strategy that maximizes deductions, minimizes tax liabilities, and ensures compliance with the latest tax laws. My goal is to help you save as much as possible while reducing stress around tax planning.
Full Implementation
Once the strategy is crafted, I will take care of the entire implementation process. You can trust me to handle the complexities, allowing you to focus on what matters most while I execute your tax plan seamlessly.
Quarterly Reviews
I provide quarterly reviews to track progress, make adjustments, and ensure that your strategy remains effective. This proactive approach keeps you ahead of any changes and ensures that your financial plan stays on track.
Ongoing Year-Round Support
My support doesn’t stop there! I offer year-round guidance, alerting you to any tax law changes and refining your strategy as needed. With my ongoing support, you’ll always be informed and ready for any tax challenges ahead.
WE REVIEW FOR APPROXIMATELY 1,500 TAX PLANNING OPPORTUNITIES
Below are Just a Few of the Broader Tax Recovery Opportunities That We Review
Cost Segregation
Our Cost Segregation Specialists would identify and reclassify assets. Our results are unmatched; we typically reclassify up to 40% of our client’s assets, providing significant tax savings.
Entity Structuring Review
Entity structuring analysis is the process of evaluating how an organization or business is structured. The structure a business chooses at the beginning of its existence will determine its legal obligations, tax burdens, financial operations, strategic planning, and operational processes.
Overlooked or Underutilized Deductions
Our income tax professionals review past returns, looking for missed opportunities. We have a vast database of the typical deductions broken down by industry to determine if the client utilizing ALL available deductions.
Review Accounting Methods
Federal Tax Accounting methods determine the timing of revenue, expenses, and treatment of inventory and fixed assets for tax purposes. Our income tax professionals conduct reviews of current accounting methods that can aid in planning to meet a taxpayer’s needs, whether to accelerate expenses to reduce taxable income and potentially create a net operating loss (NOL) or allow deferral of expenses in some cases where a taxpayer may wish to increase taxable income for credit utilization.
Fixed Asset vs. Repairs Review
Proper management and classification of fixed assets are critical to an organization’s tax management and compliance objectives. Improper capitalization of fixed assets can substantially negatively impact an organization’s balance sheet, resulting in missed tax savings and added compliance risks.
Our Fixed Asset Review Service provides a comprehensive analysis of fixed assets to determine current asset classifications, ascertain depreciation reported in prior tax returns, and identify potential asset reclassification to ensure every appropriate tax deduction available is claimed.
Tax Credits and Incentives Review
Our tax credit specialists will look for credits and incentives such as the Federal and State Research and Development Tax Credit (R&D), Work Opportunity Tax Credit (WOTC), Section 45L, Section 179D, Energy Investment Tax Credit, Disaster Zone Employment Retention Tax Credit, Federal and State Employment Zones Tax Credit, Differential Wages Tax Credit, FICA Tip Tax Credit, Small Employer Retirement Plans Startup Costs Tax Credit, and Small Employer Health Insurance Premiums Tax Credit. As opposed to deductions, tax credits are actual dollar-for-dollar federal and State credits available to businesses of any size. Many companies are unaware of the broad scope of activities that qualify for these credits. Evolving statutes, IRS regulations, and court cases continue to credit credit and incentive programs for an ever-widening range of qualified businesses.
What Our Clients Say
Michael Brown
“We have been using their payroll services for years. They are reliable and efficient.”
Jane Locus
“Their tax preparation services saved us a lot of money. Highly professional and awesome people.”
Martin Frenandez
“The bookkeeping services provided by this company have been exceptional. Highly recommend!”