Editor’s Note: TCJA tax reform increased the standard deductions which enhances this strategy. Click here for how.
I’ll give you $3,003 if you will pay your child $6,350 to work for you. Would you be interested in this proposition?
That’s what federal and state governments paid Sara Jackson when she paid her 13-year-old child $6,350 to work in her Schedule C business.
Had Sara operated her business as a corporation, state and local governments would have paid her corporation $1,650.
The $3,003 that Sara received and the $1,650 that the corporation would have received came from the built-in hiring-your-child tax breaks that we discuss in this article. And depending on you and your family, you can generate numbers vastly exceeding the $3,003 and $1,650.
Zero Taxes for the Child
First, let’s examine Sara’s child. The child ... Log in to view full article.