As you likely know, we have at this website about 40 articles where we have some discussion of your business hiring your children as W-2 employees.
The hire-your-child strategy works best for the proprietorship because when the owner hires his or her under-age-18 child, the tax code exempts both the child and the proprietorship from payroll taxes.
That’s great for proprietorship owners who have children under age 18. But if you operate as a corporation or your child is age 18 or older, you suffer payroll taxes.
This article gives you a strategy that you can use to avoid payroll taxes on children over age 18 and on children doing work for your corporation. With this strategy, your child finds work for which your business pays $15,575. You deduct that amount in your high tax bracket and your child pays only $927 in federal income taxes (6 percent of income). ... Log in to view full article.
