family member "employed" by me

[donnadonohoe]

I gave my son a substantial amount of money in 2018 for assisting me with my job. (I am an artist and he did some drawings for me) I did not do any legal paperwork for him as an employee. Are my payments to him tax deductible?

[DoninGA]

If he was paid as an independent contractor then you can enter the amount paid as an expense on your Schedule C.  The expense is entered as Contract Labor.

See this TurboTax support FAQ for entering contract labor - https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-contract-labor/01/27407

Note - your son would need to report the income he received, if over $400, on his tax return on a Schedule C since he would be a self-employed independent contractor.

[Anonymous]

a bigger question which I can not answer is whether he's an employee which would require you to withhold payroll taxes and file payroll tax returns and a w-2 or is he an independent contractor.  there would be substantial penalties if the IRS classified him as an employee. 

you may want to read this

https://www.thebalancesmb.com/how-the-irs-determines-independent-contractor-status-398618

if you want the IRS to determine classification, you can file form SS-8.  however, this might flag your return for review. 

regardless of whether he is correctly classified as an IC, you can deduct the payments to him.  the only test that need to be met is that the payments reasonable.  if you're making $500/ hour paying him $3,000/hr might be considered unreasonable and therefore not deductible.