It's not clear whether you are paying your kids as employees or as contractors.
Since you are reporting your business on Schedule C, I assume it's a sole proprietorship. If so, and the kids are employees, you do not have to withhold Social Security and Medicare tax if they are under 18. See Children employed by their parents on the IRS web site. You give them a W-2 at the end of the year. If the $5,000 of wages on a W-2 is their only income for the year, they would not have to file tax returns or pay any income tax.
If they are contractors, you have to give them a 1099-NEC at the end of the year. Since they were paid more than $400 they would have to file tax returns and pay self-employment tax, the same as if they worked for someone other than a parent. But they would not have to pay any income tax.
On your Schedule C you report payment to employees as wages. You report payment to contractors as contract labor.
