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| *Loan,banking and credit>>>income tax |
As a sole propreiter can I deduct wages paid to my minor children on my income taxes? |
As a sole propreiter can I deduct wages paid to my minor children on my income taxes? Yes you can! In fact, this is a great way to lower your SE and federal/state income taxes, get your children involved with your business, and teach them about income, taxes, and savings. Definitely do it! You can only deduct the wages you pay them on your Schedule C if the work is done in connection with your Sch C business, the child actually does work, and the money you pay them are reasonable in relation to the service provided. Keep records of services and wages. You need to give your child a W-2 and send the appropriate forms to the IRS, but any tax preparer worth their shingle knows how to do that. The first $5150 of earned income is federal tax-free because it falls below the standard deduction for 2006. And if all that isn't enough, if your child is under 18, all income they earn from your unincorporated business is exempt from FICA (social security and medicare) taxes. If the child is under 21, the income is exempt from FUTA. I believe you have to be a limited corporation in order to have your children as employees. Yes you can. You will have to issue them W-2's like any other employee. There are other rules that you need to follow as well. yes |
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