Pay Your Kids, Save on Taxes: Smart Strategy for Family Businesses

In this one-minute moment, Dr. Friday encourages sole proprietors and family partners to formally pay their working children, highlighting potential tax advantages like tax-free income up to the standard deduction and IRA contributions.

Transcript:

G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one-minute moment.

And I am shocked when I see where parents have children—they’re 15, 16, 17 years old—working for them because they’re sole proprietors or their family-held partners, and they’re not paying them. They basically don’t; the kids come in, they do the work, they’re working on the website, they’re doing the bookkeeping, they’re helping answer phones, but they’re not paying them.

You can pay a child $13,000 a year and pay zero tax because the standard deduction is zero [for them on that income, assuming no other income]. Put another seven or eight [thousand], depending on their age, into an IRA, and you can save that too. Teach them how to work and to be paid. It’s going to give them a better start in life.

You need help? 615-367-0819.

You can catch the Dr. Friday Call-In Show live every Saturday afternoon from 2 to 3 p.m. right here on 99.7 WTN.