��<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.1//EN" "http://www.w3.org/TR/xhtml11/DTD/xhtml11.dtd"> <html xmlns="http://www.w3.org/1999/xhtml" xml:lang="en"> <head> <title>Taxes And Things: did you know?</title> <meta http-equiv="content-type" content="text/html; charset=iso-8859-1" /> <!-- **** Layout Stylesheet **** --> <link rel="stylesheet" type="text/css" href="../style/style106_right.css" /> <!-- **** Colour Scheme Stylesheet **** --> <link rel="stylesheet" type="text/css" href="../style/colour2.css" /> </head> <body> <div id="main"> <div id="links"> <!-- **** INSERT LINKS HERE **** --> <a href="../contact.htm">Contact Us</a> </div> <div id="logo"><h1>Taxes And Things</h1></div> <div id="content"> <div id="menu"> <ul> <li><a href="../index.htm">HOME</a></li> <li><a href="../whatsNew.htm">What's New</a></li> <li><a id="selected" href="../message.htm">Did You Know?</a></li> <li><a href="../links.htm">links</a></li> <li><a href="../forms.htm">forms</a></li> <li><a href="../testimonials.htm">testimonials</a></li> <li><a class="last" href="../faq.htm">faq</a></li> </ul> </div> <div id="maincolumn"> <h1>did you know - pay your kids</h1> <!-- **** INSERT PAGE CONTENT HERE **** --> Do you pay your kids an allowance? How much do you pay them? $10 per month? $20 per month? How would you like to convert that personal expense into a business deduction? This is a good thing. It allows you to convert personal expenses that you would normally be paying out anyway into business deductions. Business deductions can mean big savings to you. <br /> <br /> How does this work? You hire your dependent children who are under the age of 18 and pay them to do your filing, stuffing envelopes, picking up the mail, answering the phone, cleaning the office or even mowing the lawn! Remember, your business is a reflection of you. So, if your business is a home-based business, one of their jobs can be mowing the lawn. It just doesn't get any better than that - or does it?<br /> <br /> The wages paid to your dependent child under 18 years of age are not subject to any federal payroll withholding requirements when your child earns less than $4,800 during 2003. If indeed they earn less than $4,800, they would not be required to file a federal income tax return and they would pay no tax. The best news is that the wages ARE tax deductible for your business just as are any other wages paid. Further, the wages are not subject to Social Security, Medicare or Federal Unemployment Tax.<br /> <br /> Although the law allows you to pay your dependent children and write off up to $4,800 per year that you pay them, it doesn't control what happens once you have paid them the money. So make a deal with them: "I'll pay you $90 per week, but you'll only see $10 per week. The rest will be placed into a bank account for you to save for that car you've been wanting. or for your college education". They get to earn some money (for things that they might already be doing for you anyway), you get the business deduction and allocate the funds for other important things too.<br /> <br /> So, let's bring it all together and summarize. You hire your child to provide services to your business. The wages are effectively tax free, provided your child earns less than $4,800 and they are under the age of 18. The wages are fully deductible for your business. As a sole proprietorship, the wages reduce federal taxable income on your schedule C and earnings subject to self-employment taxes on Schedule SE. The tax savings could be as high as 43% of the wages paid. Therefore, wages of $4,800 would generate a tax savings of about $2,000. In effect, the IRS is paying almost half of the wages to your children, and this is for money that you are probably giving to them anyway. So put your kids to work, put them on the payroll, and pay less tax to the IRS. <br /> <br /> Sincerely, <br /> <br /> Douglas A. Sevy </div> </div> <div id="footer"> &copy; 2004-2011 Douglas A. Sevy | <a href="../contact.htm">Contact Us</a> | Phone (951) 775-7944 | Fax (951) 602-6016 </div> </div> </body> </html>