If you can get your children to work for your business or work around the house, start paying them.
The pay must be fair for the services provided.
If the work is for your trade or business, you obtain a tax deduction for the compensation. The Federal and State tax savings may be approximately 40% to 50% of the amount paid.
If your business is a sole proprietorship or a partnership owned by you and your spouse, no FICA taxes are due until they reach age 18.
They could use the money to fund a Roth IRA or pay for college.
The maximum Roth IRA contribution for 2015 is $5,500. Just think of the funds they could accumulate in a tax free vehicle, if this is done every year.
Under current law, they can earn $6,300 before paying any federal tax.
If they are in college and you don’t claim them as a dependent, they can earn about $26,000 without paying federal tax after a $2,500 tuition credit.
Many taxpayers don’t receive any benefit for claiming a dependent exemption for a child due to the phase out rules. Also, many don’t receive any tuition credit for their children’s college tuition due to the income threshold requirements.
This is a no brainier. Don’t miss the opportunity. Get the kids working and on the payroll.
June and July Stones Tour
The Stones are back, all in their 70s, but still rocking. Funny, my first concert was in the 70s. Who would have thought?
The US tour will be in June and July this year. I am ready to go, right after getting everyone’s second quarter tax estimates out by June 15th. This time the grandkids are coming too. I will have to beg and/or bribe them.