How young can they be?

[Corduroy Frog]

A client suggests that they pay their 5 year old son to take out the garbage and vacuum the office.  Pay not enough for the son to file taxes, yet take a business deduction.

I like the idea except it doesn't seem realistic for a 05-year old.  Plus he would be exempt from social security at that age and no withholding or payroll tax deposits.  "Earned income" so no kiddie tax either.

Is there a code or reg that specifies a minimum age?  Other than just plain ole common sense.  Even with no code or reg, I'm not going to buy into the idea.

[Lee B]

I have done something similar before but not with a child that young.

In addition every state has child labor laws that govern the employment of children.

In my state, children employed must be no younger than 14.

[Corduroy Frog]

Great response Lee.  TN does not permit a child under age 14 to be employed.

Thanks

 

[Jim Oh Bkkr]

Thirty years ago, the PAY had to be reasonable (for the job), the WORK had to be performed by the child, and it had to be a sole-proprietor (corporations have NO children).  Do child labor laws apply to parent/child?

[BulldogTom]

I started my kids at about age 10 waving a sign in front of my office and shredding docs from prior years.   They filled out a timecard and got paid on payroll at minimum wage.  No PR taxes.  Gave them a W2 at the end of the year.   All wages went into a Roth.   I took the deduction.   The work was legit and it was great training for the kids.   Both still have those Roth IRAs, but one of them used part of it for college tuition.

Tom
Longview, TX  

[Lee B]

It turns out my state has a permit application process for parents to employ their children under the age of 14.

[Slippery Pencil]

Most states have exceptions in their child labor laws to the age restrictions for family businesses.

Many 5 year olds are capable of helping out in a family business and I'd have no problems taking a deduction for reasonable pay.  However, most 5 year olds wouldn't be capable of getting a full garbage bag into a dumpster or operating a vacuum cleaner that is as tall as they are.

[BulldogTom]

On 12/17/2024 at 7:47 PM, Corduroy Frog said:

A client suggests that they pay their 5 year old son to take out the garbage and vacuum the office.  Pay not enough for the son to file taxes, yet take a business deduction.

You want to file that child's tax return if you are putting the child's wages into a Roth (which is why you hire the kid in the first place IMHO).   It starts the clock on the five year period of ownership for the Roth.   

Whether or not the work is legit by a 5 year old is not what I am addressing.

Tom
Longview, TX

[Catherine]

I started mine around age 5 or 6. Shredding; paid by the inch. When they got older, filing, printing, and as teens answering phones. since we all three sound identical on the phone, they got real good at fielding general inquiries.   Specific queries were handed off to me.

[Sara EA]

Paid by the inch?  And just how did you calculate that?  Reminds me when our dad used to pay us for each dandelion we pulled out of the yard with the puller gizmo.  Who counted when we each had a bushel basket filled to various heights?  We lived in a rural area, so money didn't mean much anyway because there was nowhere to spend it. 

[schirallicpa]

I had a WC auditor come audit my tiny payroll which included my kids at the time.  I remember him asking me what they did with their money. I told him I didn't ask me other employees what they did with their money so why would I ask them.  He just rolled his eyes.

[Catherine]

On 12/21/2024 at 10:25 PM, Sara EA said:

Paid by the inch?  And just how did you calculate that?

I would have a stack of papers to shred. When it hit an inch, I put it out for shredding.