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Should I issue a 1099 or W2 for an employee that is my child?


Question 1:

I have an LLC owned 100% by myself. My son worked for me this year. The LLC paid him less than $12,000.
Should I issue him a 1099 or a W-2?

Question 1 is my most important question. 

Question 2:

(Assuming the answer is W-2 from above, I have this question):

I am under the impression I issue him a W-2 because that is what you do with employees. As well, we'd rather not file taxes for him, which, as far as I understand it would, would be required if he received even $1 of 1099 income. But, for <$12000 of W2 income, he is not required to file.

He is the ONLY employee. On the W-2 form, it requires I put a State ID (15). That state ID is in reference to the withholding account at the state of Utah (where this is happening). But, since I've never paid employee withholdings and likely never will, I don't have an account. To get an account ID, I need to apply for one through the state tax commission website. It is free and takes a couple of weeks to get a number.

Do I,

a) Leave box 15 blank?

b) Apply for the account and issue a W2 without the # on there?

c) Wait for the account ID is issued, and then issue the W2 and file the W3?

Thank you so much!

2 Replies
Level 15

Should I issue a 1099 or W2 for an employee that is my child?

somehow the 15.3% social security tax has to be paid...... so if he is an employee, the LLC would have been responsible for withholding 7.65% (SS and medicare tax) from his paycheck and then the LLC would have been responsible for the employer match)..  alternatively your son receives a 1099 and he is responsible for the 15.3% tax (TT will calculate this automatically). 

Expert Alumni

Should I issue a 1099 or W2 for an employee that is my child?

Any employee should be paid by Form W-2. The IRS is very specific about what constitutes an employee or an Independent Contactor. You can still set yourself up to pay any taxes that should have been done throughout the year. You will need to make payments through EFTPS.


That being said, his age has a lot to do with how he is taxed since he works in a family business. If he is under age 18, the payments are not subject to Social Security and Medicare taxes.. Please click this link Family Employees for more information.


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