Hiring family members is a perfectly legal and common for small business owners.
As long as they are doing legitimate work for your business, you can hire your children tax-free and pay each of them up to $14,600 (2024) and they will not be subject to income tax.
But you should check your state's child labor laws and ensure your child meets the age requirements to work and they can complete their job within your state's regulated working hours
You can pay your child with a W-2, and you will not be required to pay Social Security or Medicare taxes.
You can deduct their wages as a business expense.
Also, you will not have to pay unemployment taxes.
You should keep accurate records of employment such as timesheets and proof of pay.
You can pay family members up to $18,000 for 2024, as that is the gift tax limit.
You would file a schedule C for your business. This can be done using TurboTax Deluxe or Home & Business.
QuickBooks which is also an Intuit product has a payroll system.
Click here for "The Benefits of Employing Your Children and the Tax Breaks Involved"
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