Having the kids help

[Samantha P.]

I would like to have my 11 year old daughter help out with my real estate business in some way so that I can pay her and she can be a business expense. Is anyone else doing this? What are you having your teens and preteens help with that you can pay them for?

[Peter Philando]

The IRS allows any sole proprietorship or partnership (LLC) that is wholly owned by a child's parents to pay wages to children under age 18 without having to withhold the payroll taxes. However, if you have an S or a C-Corporation you do not receive this benefit of avoiding FICA when paying your children.

This is a great strategy to start the kids building wealth. Put them on the books and open a custodial Roth IRA (or regular ROTH if 18+). They can contribute as much of their EARNED income up to $5K each year. Sometimes grandparents who have to take required minimum distribution from retirement accounts, but don't necessarily need the money, can contribute for the grandkids. The grandkids can keep their earnings to do other things.

The kids must perform an actual job..... answering the phone, scheduling appointments, if self-managing.. offload some of the PM duties. You can come up with lots of things that you would have to pay someone to do .... pay your kids instead .... just make sure they are doing the job.

Hope this helps