Do your children help around the office or with your business? Paying your children through payroll could be a great way to keep more money in your family’s pocket while simultaneously teaching them a great work ethic. The standard deduction in 2023 has increased to $13,850 for single filers. Meaning that you can pay your child up to $13,850 a year and they will not be subject to Federal income taxes, and your business can deduct their payroll expense. This tax break can save you thousands each year and applies to both minors and those kids over age 18.
The IRS does set the requirement that your child perform actual work to be able to substantiate the reasoning for receiving payroll. The IRS has set the following guidelines for your child’s work:
They must perform legitimate work appropriate to their age and skill set.
Their work must exceed the normal household chores they already do.
They must be paid the going rate for their services and not be over-compensated.
Good records must be kept, including filing W-2s.
Their services, work conditions, and hours must be in compliance with federal and state child-labor laws.
There are numerous different jobs your children can handle for you, which can not only give them valuable work experience, but also provide your business with much needed support, all while staying in line with the IRS standards. Here are a few examples of jobs your children can perform at the office:
Serve as models in your advertisements
Answer phone calls
Clean your office
Wash company cars
Updating and maintain customer lists
Mailing bills and making trips to the post office
Control your company’s social media posts
Please keep in mind this article is not meant to be financial advice and each businesses circumstances are different. Contact J & M Accounting today to see how this article could benefit your business.
Comments