Why do you NOT want to issue a W-2?
You must issue a W-2 if the income is subject to federal or state withholding. Federal income tax withholding would kick in at annual wages of $12,400 for 2020 and $12,550 for 2021, but what about state withholding? You will need to check your own state laws and requirements.
But why do you not want to issue a W-2? You're trying to turn $12,000 of taxable business income into tax-free money for your kid. If audited, you will need to be able to prove to the IRS that your child performed legitimate work and you paid a fair market wage that was not bogus or inflated. Filing a W-2 and forms 941/944 may help you prove this to the IRS.
See this for more
https://www.kitces.com/blog/tax-rules-hiring-children-family-business-flsa-tax-savings-standard-dedu...
