My daughter (16 years old)works for me. (builds vi...
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dneran
Level 2

My daughter (16 years old)works for me. (builds video's, handles social media, etc.). Does it make sense to have her as an employee or contractor?

She is taking on any projects herself with  little direction from me. With her age and being a family member would I still need to pay payroll taxes by having her as an employee? If contractor is better does she need to file a 1099 from me?
3 Replies
Bsch4477
Level 15

My daughter (16 years old)works for me. (builds video's, handles social media, etc.). Does it make sense to have her as an employee or contractor?

From the IRS:

 

Child employed by parents

Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child. Refer to the "Covered services of a child" section below. Payments for the services of a child under age 21 who works for his or her parent in a trade or business are not subject to Federal Unemployment Tax Act (FUTA) tax. Payment for the services of a child are subject to income tax withholding, regardless of age.

Covered services of a child

The wages for the services of a child are subject to income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for:

  • A corporation, even if it is controlled by the child's parent,
  • A partnership, even if the child's parent is a partner, unless each partner is a parent of the child, or
  • An estate, even if it is the estate of a deceased parent.
dneran
Level 2

My daughter (16 years old)works for me. (builds video's, handles social media, etc.). Does it make sense to have her as an employee or contractor?

Thank you for the detailed response....very helpful. One question, since she wouldn't be subject to all the various taxes due to age how do I "label" my 16 year olds work through turbo tax? employee or contractor or is there another option?

DaveF1006
Employee Tax Expert

My daughter (16 years old)works for me. (builds video's, handles social media, etc.). Does it make sense to have her as an employee or contractor?

it depends. If you paid your daughter $400 or more, I would suggest issuing a 1099 MISC so that she can report this. In fact, this is an IRS requirement that must be followed if self-employment income is more than $400.There will be no tax consequence since she is underaged and you can claim this as a contract labor expense. 

 

If you withheld taxes and sent to the IRS, then i would suggest filing a W2 so if your daughter files her taxes, she can receive that money back. Hopefully this is a guideline on which form to file.

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