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Why You Should Hire Your Kids

05/15/24

If you have a business, hiring your kids can have a double benefit. It’s a way for your kids to earn some money, and you can deduct their earnings as a business expense. The only caveat is that it has to be a legitimate business, and your kid has to do legitimate work. You can hire your kids under the age of 18 without having to withhold any taxes unless your business is a C-Corporation; and your kids won’t owe any taxes unless they earn more than the standard deduction. All of this, plus you can still claim them as a dependency exemption on your taxes and claim the child tax credit if you’re eligible.

Hiring your kids in your business is a tremendous opportunity to help them understand the value of working to earn money; and if you direct deposit their earnings into a checking and a savings account, they can begin to learn sound money management principles. To that end, you could also have them establish a Roth IRA, to which they can contribute a portion of their earnings. A Roth IRA is a great retirement savings vehicle, but it can also be used to pay for college expenses.

Business - Financial Planning

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This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, before making any decisions related to these matters, you should consult a qualified professional advisor.