98. Kids on Payroll: The Legal Tax Hack to Save Taxes Every Year!
Episode Highlights
0:00 - Introduction and Post-Tax Season Thoughts
2:15 - Why Pay Kids Through Your Business
5:38 - Finding Legitimate Work for Children
8:14 - Setting Reasonable Wages by Age
10:55 - Documentation and Payment Methods
13:45 - What to Do With the Money
16:30 - Final Steps and Episode Summary
Episode Summary
Paying your children through your business is a legitimate and powerful tax strategy that can save you thousands every year!
• Reduce taxes by converting business income into deductible expenses with zero tax impact
• Children earning under $15,000 (2025 standard deduction) pay no income tax and don't need to file returns
• Sole proprietors (Schedule C) and farms (Schedule F) don't pay payroll taxes on wages to children
• S-corporations must pay payroll taxes, but strategy remains beneficial for 22%+ tax brackets
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