MT World News Center

Tools & Resources
Calorie Counter
Human Anatomy Images and Diagrams
Most Common Drugs
Medical Transcription Services
Productivity Tools
Normal Lab Values
Medical Terminology
Medical Transcription Associations
Medical Transcription Certification
Counting Lines
Medical Abbreviations
Medical Plurals
Calendar of Events
Understanding HIPAA
Grammar Rules
IC vs Employee Status
Comic Relief!
MT Article Archive
Neurology Resources

Search Drug Database

Pharma Search Tool

Search Language Database

Language Search Tool





Hire Your Kids!

Free Info on our recommended Medical Transcription Program leading to an exciting home based medical transcription career

It's hard in today's turbo-charged world to find time to spend with family. Why not do as a growing number of creative small business owners are doing and hire your kids?

Not only does this give you a great opportunity to spend some quality time interacting with those closest to you, it also provides a rare opportunity for them to learn meaningful skills and acquire valuable training that will serve them well into the future.

Hiring your kids can also be a financial winner for all concerned. You get a tax deduction and your kids get some extra income. The IRS allows reasonable wages paid to minor children to be deducted the same as any other business expense. The key word is reasonable. As long as the wages you pay to your children are in line with wages you would pay to another person doing the same job, you should not have a problem claiming the deduction.

The beauty of this type of arrangement is that you will be able to effectively shift income away from your business to a child who will probably be in a position to shelter the entire income from taxation (depending on the amount). Currently, children under the age of 18 can earn approximately $4,700 (for year 2002) in income without owing any federal income tax. It may also be possible to avoid FICA tax withholding - depending on the legal structure of your company. Check with your accountant to see if your business qualifies.

Before putting your kids on the payroll however, you should consider the following:

Get some professional tax advice.

While the tax law provides for the employment of minor children, there are some specific requirements and guidelines which must be adhered to in order to stay in the good graces of the IRS. It is always advisable to seek professional guidance as you structure an employment arrangement of this type.

Establish formal job agreements with your employed children.

Formalizing a child's job responsibilities will provide important documentation in the event of a tax audit. It should go without saying that the work that is being performed should be relevant to the ongoing operation of your business. Mowing the lawn, for example, will probably not qualify as a legitimate business deduction. Formalizing a job description will also provide a valuable tool to help your child understand exactly what is expected of him or her.

Keep careful records of work performed and payments made.

It will be important that you be able to demonstrate exactly what work was performed and what payments were made to your children in the event of an IRS audit. Detailed records will go a long way toward satisfying the curiosity of an inquiring IRS agent.

Be sure to complete and file all required tax forms.

Again, this is an area where professional guidance will be important. For starters, you will need to fill out W-4 forms for each of your children that will be on your payroll. If FICA tax witholding is required you will need to treat wages paid to your children as you would any other wages. Don't forget that even though your child may not owe any taxes, it may still be necessary for them to file a tax return.

Free Info on our recommended Medical Transcription Program leading to an exciting home based medical transcription career

  ^ Top