As a business owner, you have the opportunity to save income tax and payroll tax (when looking at the family as a whole) by putting your children on the payroll. In doing so, you may be able to turn high-taxed income into tax-free or low-taxed income, achieve social security tax savings (depending on how your business is organized), and even make retirement plan contributions for your child. In addition, employing a child age 18 (or if a full-time student, age 19-23) may be a way to save taxes on the child’s unearned income, as explained below. Here are the key considerations.
Turning High-Taxed Income into Tax-Free or Low-Taxed Income
You can turn some of your high-taxed income into tax-free or low-taxed income by […]