You’re newly self-employed, and your kids are out of school for the summer. Hmmm. Do you have one or more young ones who could do some useful work for your business? If so, hiring your kid — or several of your kids — can deliver some nice tax advantages. Because kids are leaving school and will probably be fully available for the next few months, this is a timely story. Forget about those swimming and tennis lessons you might have been thinking about. Put the darn kids to work.
Bottom line: Your child will owe nothing to the Feds on the first $12,950 of wages, unless he or she has income from other sources. The kid can then set aside some or all of the wages and contribute money to a Roth IRA or a college fund. For the 2022 tax year, your child can contribute the lesser of: his or her earned income or $6,000. While the same $6,000 contribution limit applies to a Roth IRA and a traditional deductible IRA, the Roth option is almost always better for kids for the reasons explained later.
* Say the kid contributes $2,500 at the end of each of the four years. Assuming a 5% return, the Roth account would be worth about $82,000 in 45 years. Assuming an 8% return, the account value jumps to a whopping $285,000. Wow.
Yay nepotism. Definitely noticed it was white people with generational wealth being the center picture for this article
I hire everyone. 1099s to all 😂
They're going to earn $13k over summer?
Yes...if you pay them in cash.
You don't pay your kids they are literal slaves. Free money no taxes
I’d love to come work on the family farm. I am a city gal but country at heart. Would hire somebody turning 70 in December. I’m a good hard-working person. I still love my job of real estate title but I would love to farm or ranch as my second career.