• Harrison

Keep it in the family, hire your child

Updated: Feb 28, 2019

Planning Suggestion: Children's Taxes (Kiddie Tax) If you own a business, consider

hiring and paying a salary to your child. This income

will be taxed at the child’s rates, and the payment will

be deductible by your business. This technique can be

used to fund a college education. Of course, the child

must perform services to earn the compensation,

and the compensation must be reasonable for the

services provided.

For 2018, a child under age 18 is not required to file a tax

return if the child only has interest and dividend income

up to $1,050, has not made estimated payments, has total

gross income less than $10,500, and is not subject to backup

withholding. However, the parents must include the child’s

income exceeding $2,100 on his/her tax return.

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