Single member LL with my children employees

[seemaesq]

My 2 kids under 18 helped out and were paid less than $12k for the year.  How do I report this to the IRS?  I have never done this before.  I do not think they are 1099s, but do I need to file a 944?   HELP!!  

[DMarkM1]

No.  You do not need to file a form 944.  Since you are the parent of the children under age 18 and your business for tax purposes is a sole proprietorship, the children are not subject to social security or medicare taxes.  Further, since they are under age 21 they are not subject to unemployment tax.  Additionally, since the pay is under $12K there would be no income tax withholding.  

Here is the IRS reference.  

Having said that you should issue forms W2 with a copy to them showing the salaries paid.  This supports your business deduction for the salaries paid.  Again the W2s will not have any social security, medicare or income taxes withheld.

You could issue a 1099-NEC instead of W2 however then the children would be subject to self-employment taxes (social security/medicare).    

[AK1982]

Thank you!
I'll Issue my kids W2 without the SS#. Do I need to report w2 to IRS or just keep it for my record?
Also, how do I show this payment to my LLC in TurboTax to deduct that amount? If you could provide me the steps on the desktop version that would be great. Thank you in advance!

[Vanessa A]

You need to include your kids SSN's on the W-2.  You cannot issue a W-2 without the Social Security Number.  

You will also need to report it to the IRS.  Whenever you issue a W-2, regardless of who it is to, you must send it to the IRS for it to have any value. 

What you do not have to do is withhold Social Security and Medicare taxes (This is not the same as entering their SSN on the W-2)

To enter the wages paid to your kids on your return, you will select the following:

• Business Income and Expenses
• Edit next to your business
• Other Common Business Expenses
• Start next to Employee Expenses