Your business ownership creates an opportunity for a tax plan that can give you tax deductions for hiring your children and can give your children tax-free income. But your tax plan does not stop there. Your children might start Roth IRAs where they can invest their tax-free income in a college fund. Done right, as described in this article, the government pays you for your help with this plan.

Learn how the government pays you to get educated. The basic rule: you may deduct education that maintains or improves the skills you need in your business, providing the education does not qualify you for a new business.

Tax law favors the son or daughter working for the mother or father in a proprietorship or husband and wife partnership. If you operate your business as a corporation, you also can come out ahead by hiring your child.

Having your child work in your business produces college funding strategies with both the Roth and the traditional IRA. As an added bonus, you can use the traditional IRA with earned income to eliminate some kiddie tax.

Establish a Section 127 educational assistance plan in your business to help pay your age 21 or older child’s college or other education costs. If you are in business and you have a child that’s age 21 or older in financial need of educational assistance, this is a plan to consider.

As a subscriber, you may download this sample Section 127 educational assistance plan in Microsoft Word. Then, simply modify the document to your business use.

Lawmakers wiped out tried-and-true tactics for getting the government to help with the cost of your child’s college with the new tax law in 2007. You can do a lot to mitigate the damage if you get after this problem right now.

Lawmakers wiped out tried-and-true tactics for getting the government to help with the cost of your child’s college with the new tax law in 2007. You can do a lot to mitigate the damage if you get after this problem right now.