With school ending and summer approaching, many kids are planning getaways with friends, hangouts by the pool and staying up all night playing Xbox. Well parents, put away that Xbox and set those alarms! Now more than ever, parents have a legitimate reason to put their kids to work. Hiring your child as an employee of your business can be a great tax-saving strategy on both you and your operation.
According to Marketwatch.com, when you hire your child, you get a business tax deduction for employee wage expense—money you might have given to your child anyway. The deduction reduces your federal income tax bill and, if applicable, your self-employment and your state income tax bill. In addition, your child can set their earnings aside for a Roth IRA or college fund. The hire-the-kid-strategy works best for teenagers who can work on meaningful tasks, creating a win-win-win situation for your child, your business and yourself.