How to Employ Your Child Legally

If you look up regulations that help you pay less tax on income, you might wonder – can you pay your kid 12k a year – really? Well, yes and no.

How to Hire Your Kid as an Employee

If you already give your kid an allowance then you might want to find a way to get a tax break on all their labor. Household help in this way is rarely going to pass muster, but there are legal ways to employ your kid in your business. This depends on their age and the type of work available. If you own your own business, they can work for you as legally paid employees, and you can deduct their salaries as a business expense with the IRS.

Since the IRS has special rules for hiring children, you need to do your research to avoid penalties and lawsuits. Check out this IRS video that explains in detail.

Be aware of these considerations:

  • Consider the age of your child. Study the child labor laws in your state. Their age will determine what type of job they can perform and, thus, market rate salary for their work. For smaller kids, jobs like modeling might work. Whereas older kids might take on a more substantial role.
  • Chores and simple errands rarely count as work. So your company will need to have real meaningful work to offer – whether that’s modeling products or making deliveries. Make sure the role is not hazardous to their health or well being.
  • Maturity Level Matters. This is about more than age. If your kid is forgetful, don’t make them your assistant. Similarly, consider their emotional intelligence level. Can they handle rejection or will they need a lot of supervision? If they are employed as a caregiver, make sure they are trained properly.
  • File all the necessary paperwork. In order for things to be legally sound, you’ll need to submit appropriate tax withholding documents (W2, W9s, etc.) for your business. Confirmation of receipt of their salary should also be well documented.

Here are some job categories to consider:

  1. Unskilled jobs: This includes janitorial work, social media management, making deliveries, preparing orders and shipping items, product research and sourcing, inventory management, modeling, etc.
  1. Skilled Jobs: This includes graphic designing, creating sales copies, website designing, digital advertising, apprenticeships, photographing, styling artists, etc.
  1. Outside Your Family Business: This depends on your child’s age. Some options include babysitting, tutoring, freelancers, product designers, salespersons, etc.