Of course ... the local pro may advise you to NOT report the payment to your kids unless the kids have already reported the income on their own returns. The only reason to pay them is to deduct the amount on your Sch C to reduce your taxes by having the children pay the taxes instead. If they have not reported the income yet then you have the option to NOT deduct the money you gave them even if they worked for it ... consider it a gift or just the cost of supporting them.
This way you will just pay the taxes on your return and they don't need to file and you don't need to file late payroll forms or 1099s so you avoid the penalties. The taxes you pay (depending on how much you paid the kids) may offset the penalties/interest on the late forms. Just an idea ... need to think both ways on it and a good tax pro should be able to educate you in all the pros & cons.
