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Avraham "AY" Rappaport, CLTC
President, Financial Professional
Yaniv "Jay" Natanov
President, Financial Planner
Eli Rappaport
Vice President, Financial Planner
Shlomo Rosenstein
Financial Professional
Ozzie Marizan
Financial Planner
Joseph Greer
Employee Benefits Administrator
Dylan Pinsky
Client Relations Manager
Premier Financial
6395 Dobbin Road, Suite 102
Columbia, MD 21045
Phone: 240-309-6001
Email: dylan.pinsky@prudential.com
Website: premierfinancial1.com
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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Premier Financial is not affiliated with Prudential Financial. Premier Financial sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Premier Financial is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Premier Financial and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Dylan Pinsky is employed by Eli Rappaport and not The Prudential Insurance Company of America or its subsidiaries.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
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