Tax Deductions

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7 Tax Strategies: Hiring the Kids or Grandparents Tax Strategy

Picture of senior sitting on tires working at a family transportation small business as a strategy to reduce tax payments

Does your business qualify to hire kids and grandparents?

Small businesses that are not taxed as corporations can hire their kids and grandparents without incurring any federal or payroll tax for legitimate services rendered paid at market rate.

In other words, you can pay them money for actual work done but you can’t pay them a thousand dollars to bring you coffee in the morning that one time.

Benefits of hiring kids and grandparents

This is a great way they can earn for their college on a tax-free base.

  • Child’s Earned Income (Tax Free)
  • Tax Sheltered Strategy
  • Growth with Interest (Tax Free)
  • Pays for College (Tax Free)

With sky-rocketing cost of college tuition, it makes sense now more than ever to save for your kid’s college at tax free bases.

The longer you have, the more time you have to generate interest on your investment.

Your grandparents or retired parent will probably have to pay payroll or self-employment tax but may not be liable for federal taxes. This depends on their total income for the year.

Running the calculation would be important to understand the specific tax saving you could earn:

Are you a small business looking to close your year in the best possible financial shape?

We have an innovative approach to improve your cash flow and reduce your tax payments. Schedule a free zoom call with one of our tax specialists today:

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