Receive Pro Tips & Insider Knowledge On How To Successfully Build Your Real Estate Empire

Tax Tips with Brandyn Cox EA

Tax Tips with Brandyn Cox EA: How to Make Your Kid Rich

Tax Tips with Brandyn: I get asked all the time about how to hire your children in your business and create less tax burden. Well, here is how it works:

1) Must be a sole proprietor or partnership (No S Election)

2) You can hire your child, age must be under 18. You and your child won’t be subject to social security and Medicare taxes or federal unemployment taxes.

3) You may have to pay state unemployment taxes, but this will vary state to state. One if the most expensive I’ve seen is MN with about $400 annually.

4) Issue a W2 year end.

Tax Tips  For Investors

How Much Can You Pay Them?

You can pay them however much you want, so long as you are paying them for wages, but keep in mind you are trying to avoid having your child owe taxes. A dependents standard deduction for 2020 is either $1,100 or $350 + Earned Income (Not to exceed $12,400). This is important because if their wages are less than their standard deduction, well, then there are no taxes due.

Great, so we know how to pay our kids now. I thought you said I can make my kids rich too?

Yes, have that money go into a ROTH IRA and/or invest that money into a whole life policy or IUL, etc.

If you were to put in $6,000/yr for 18 years of your child’s life into a ROTH IRA and never contribute to it again, you could easily have ovwr $168,000 (assuming 5% gains) at 18 and almost $2M at retirement age.

Not a bad idea for only an investment of $108,000. Use this as a tool. May not work for everyone. Speak with a financial advisor who can put your money in the right spot. Tax wise, that’s a total deduction on your business return and your kid isn’t going to pay any taxes if you follow the steps above.

If you’d like to know more about this and other methods, book a free consultation with Brandyn!

Kelly Madden

Kelly Madden

Kelly is a 14-year Air Force spouse, real estate agent, real estate investor, and virtual assistant. After starting out as an intern with ADPI in 2019 and later acting as ADPI’s blog coordinator in Jan 2020, Kelly is thrilled and honored to take on the role of ADPI’s new Community Manager as of November 2020. She looks forward to building our community and supporting our members throughout their real estate investing journey.
Kelly Madden

Kelly Madden

Kelly is a 14-year Air Force spouse, real estate agent, real estate investor, and virtual assistant. After starting out as an intern with ADPI in 2019 and later acting as ADPI’s blog coordinator in Jan 2020, Kelly is thrilled and honored to take on the role of ADPI’s new Community Manager as of November 2020. She looks forward to building our community and supporting our members throughout their real estate investing journey.
Share the love
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest
Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

Receive Pro Tips & Insider Knowledge On How To Successfully Build Your Real Estate Empire

Team-photo-sidebar

Our team strives to educate, mentor and empower active duty service members, veterans, spouses and military families to reach financial freedom through creating passive income through real estate investing. Our goal is for Active Duty Passive Income (ADPI) members to own as much of America as possible.