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Tax Tip Tip #10, Child Employment Deduction

Published Tuesday, November 19, 2019 8:30 am

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Have you wondered how you can employ your children and get a deduction for this?

Payments for the services of a child under age 18 aren't subject to Social Security and Medicare taxes, if the business is a sole proprietorship or a partnership in which each partner is a parent of the child. Payments to a child under age 21 aren't subject to Federal Unemployment either. Payments are subject to income tax withholding (federal and state), regardless of the child's age.

Payments for the services of a child are subject to income tax withholding as well as Social Security, Medicare and Federal Unemployment taxes if he works for: a) a corporation, even if it's controlled by the child's parent, or b) a partnership, even if the child's parent is a partner, unless each partner is a parent of the child.

If you have questions, please contact Gail Iverson at giverson@rushtonandcompany.com or (770)287-7800. Stay tuned for more tax tips or follow them on our social media accounts every #TaxTipTuesday!

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