topic I pay my kids for work to support my business. Where (which section) do I put down their wages? in Business & farm

I pay my kids for work to support my business. Where (which section) do I put down their wages?

saovientiane1 — Tue, 30 Jun 2020 13:54:56 GMT

Re: I pay my kids for work to support my business. Where (which section) do I put down their wages?

Critter-3 — Tue, 30 Jun 2020 16:16:05 GMT

Depends ... do you treat them as sub contractors / casual laborers or as employees and file payroll tax reports quarterly ?

There are 17 unique categories for entering business expenses in the TurboTax Home and Business program for a Schedule C. If you have a particular expense that does not fit in the other 16 categories listed use Other Miscellaneous Expenses at the bottom of the list.

Click on Business
Click on Business Income and Expenses
Click on I'll choose what I work on
On Profit or Loss from Business, click on the start or update button

On the next screen, click on Edit for your business listed.

On the next screen scroll down to Business Expenses

On Other Common Business Expenses, click on the start or update button

Re: I pay my kids for work to support my business. Where (which section) do I put down their wages?

saovientiane1 — Tue, 30 Jun 2020 17:30:21 GMT

I think employee would work best. I wouldn't have to withhold taxes as they are both under 18. Would it be under Household employee (schedule H). Thanks

Re: I pay my kids for work to support my business. Where (which section) do I put down their wages?

AmeliesUncle — Tue, 30 Jun 2020 17:36:40 GMT

Yes, they are employees. No, they are not Household Employees.

When you are in the business section reporting your expenses for your business, there should be a place to enter wages to employees.

You did send out W-2s, right? If not, that needs to be done (and pay late-filing penalties).

Re: I pay my kids for work to support my business. Where (which section) do I put down their wages?

RobertG — Tue, 30 Jun 2020 17:39:42 GMT

Household employee expenses are not deductible, they are a personal expense. Schedule H is used to pay their payroll taxes.

If your children are employees, you should indicate that you have employees in the General info section of your Schedule C.

Otherwise select Contract Labor as an expense.

Re: I pay my kids for work to support my business. Where (which section) do I put down their wages?

Critter-3 — Tue, 30 Jun 2020 19:43:50 GMT

Even if no taxes are to be paid you must file payroll tax forms timely ... read up on the forms 940, 941, W-2 & W-3 plus the FUTA, SUTA and any other state or local requirements. Seek local payroll tax assistance so you don't pay a lot of penalties.

Re: I pay my kids for work to support my business. Where (which section) do I put down their wages?

AmeliesUncle — Tue, 30 Jun 2020 22:02:02 GMT

@Critter-3

Unless they withheld income taxes, the 941s are not required because there are no Social Security/Medicare wages.
Although the Instructions for 940/FUTA would indicate one should be filed, an IRS agent told me not to file them if all wages are (and always have been) exempt. They don't want a form with a bunch of zeros year after year. In the event the IRS were to request it, the penalty is based on the amount owed, so no penalty would be owed.
State rules may vary, but most states that I am aware exempt children who are employees of the parent, so no SUTA would be required.

That means in most cases the only requirement is to file the W-2/W-3. But there ARE penalties for filing late.