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Craig Lundquist, MBA, ChFC®, CRPC®
VP of Wealth Management
651-773-2757
Kristin Becker
Senior Administrative Assistant
651-773-2821
Ideal Wealth Advisors
Located at Ideal Credit Union
8499 Tamarack Road
Woodbury, MN 55125
CRPC conferred by College for Financial Planning
July/August 2022
Hire Your Children
One of the monetary benefits of having children is that you get to claim them as dependents when you file your income taxes. But business owners may be able to take advantage of another benefit: a tax deduction for putting your child to work.
Hiring your children to work in your business provides them with an opportunity to earn money, while giving you a break on taxes. When you hire your children, you’re able to deduct their wages, lowering your business’s taxable income. However, your child's earnings are subject to income tax withholding regardless of age.
The IRS has strict rules for business owners who want to hire their children. If you fail to follow them, you’ll forfeit the tax deduction for their salaries and benefits.
Give Them a Real Job
The duties your child performs must be necessary and appropriate for your business. Tasks such as answering phones, filing, helping with your website or social media accounts, running errands, etc., can qualify. Just make sure the work is suitable for the age of your child, and keep accurate records of the hours your child works.Offer Reasonable Compensation
The compensation your child receives should be the amount you would pay an outsider for doing the same work. Find out how much people with similar jobs and experience earn in your area. An employment agency can be a good source of information. Paying your child by check or through direct deposit — never in cash — provides a record of your child’s earnings to show the IRS.Reap the Tax Benefits
Your child can earn up to $12,950, the standard deduction for a single taxpayer in 2022, without owing income taxes. You get to deduct the earnings of each child your business employs, potentially reducing your taxable income by a substantial amount.Your tax professional can help you with the details of hiring your children and keep you from running afoul of IRS tax rules.
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Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Ideal Credit Union and Ideal Wealth Advisors are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Ideal Wealth Advisors, and may also be employees of Ideal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of Ideal Credit Union or Ideal Wealth Advisors. Securities and insurance offered through LPL or its affiliates are:
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