Encourage your children to work next summer. Everyone benefits–you, your kids, and their employers, especially if the youngsters work for you.
Financial issues aside, working children begin to develop a valuable work ethic, a work history that should help them land that first position when they graduate from school, and an appreciation of the long hours you toil. What’s more, they can save their earnings to pay for tuition, room, board, and other expenses, meaning less cost for you.
You might be asking yourself, “but when is it a good time to teach kids about money?”, and the Wallet Doctor has covered this in a recent article: http://thewalletdoctor.com/teach-kids-about-money/
Each child can earn, income-tax-free, a bit more than the $3,000. Even if your youngsters work all summer, and perhaps over Thanksgiving and Christmas vacations, it’s unlikely they will exceed this ceiling. To reach $3,000, each will have to work 15 weeks, 40 hours a week, at $5 an hour. And any amount that they do earn beyond the standard deduction is lightly taxed.
The child does not claim his own personal exemption on his return. As long as your child is a full-time student, you claim the child as your tax dependent, assuming, of course, that you furnish more than half the child’s support.
If you operate your own firm, incorporated or not, consider hiring your youngsters. If your business is unincorporated and the kids are under 18, you won’t even have to pay Social Security tax on their salaries.
Of course, the reasonable salary you pay all your employees is deductible by your firm as a business expense. Just be sure to pay a fair wage for the work performed. Remember, even young teens can file papers, operate your computer, answer the phone, sort files, and so on. The courts have upheld the deductibility of salaries paid by a business owner who hired preteens at minimum wage to keep up the grounds around the office. Or follow the example of one enterprising business owner who had four teenagers. He paid the three youngest to work; the eldest received a larger salary for supervising the others.
Photo: flickr.com/photos/lucias_clay/1064824543/Filed under Child Education | Comment (0)