All Forum Posts by: Lily Lee

@Nicholas Aiola, Hi Nicholas, thanks for your great suggestions we are trying to do it right this year so we can save taxes for year 2021:) 

I've got the EIN for sole-proprietorship and opened bank account with the EIN.  I've been trying to figuring out how to file payroll(you mentioned interim payroll in previous post), since there won't be any tax withholding for the kids(not plan to put more than $10k/yr for each kid), do I still have to file payroll, if so, do you mean file payroll to IRS monthly or quarterly ?

I've been trying to following do-yourself-payroll here, they also mentioned file " employer federal tax return (usually each quarter)" , is that necessary since this is sole-proprietorship?

https://squareup.com/us/en/tow...

Thanks again for your kind help!

Lily

Thank you @Michael Plaks. So looks like I need to apply for an EIN myself in order to hire them, they need to fill out I-9. we don't plan to put more than $10k/year for each kid, will their income still be withheld and they need file W-4?

You mentioned 1099s not appropriate, should I do monthly payroll for them and end of year W2?

I am setting this up now. so for our tax next year and EIN, I can  use schedule E to deduct kids pay from rental expenses, will the EIN appear anywhere on my own tax return next year, wonder how IRS verify the EIN pay to kids on their end.

Thanks again for your help!!

@Nicholas Aiola, thanks for the clarification!  We don't have EIN, I just transfer money from my personal bank to theirs. Will  that work? 

Why do you need separate EIN if you just do passthrough schedule E. Does that mean we may need to file a separate tax return using EIN other than our joint return. Sorry about so many questions, I just don't want to loose the $10k tax benefit paid to kids last year for their help with rental

Thanks @Nicholas Aiola! All I have been reading seem to suggest the payment to child helping rental has to be made from some sort of 'business', like single-member LLC. Does that mean we have to have the properties under LLC name and pay kids through LLC account instead of directly from parents. Currently the properties are not under LLC. With no LLC involved in the picture, how to convenience IRS this is 'business' instead of 'personal' to avoid been audited?

Also, for those who have property under single-member LLC so can do passthrough using schedule E, do you mention your LLC name on schedule E, or personal names?

Here are some links seems to suggest only properties under LLC can deduct payment to kids,

https://www.biggerpockets.com/...

@Nicholas Aiola 

We have several rentals under me and my husband personal name not LLC name, my 12 and 14 have been helping with rentals especially during summer, they did all the paintings and lots other jobs. I've paid them $5000 each last year directly deposited to their own bank account

My question is can I deduct the money paid to kids doing rental help even if the rental are under my husband and my name instead of LLC? If so, should I list the pay under item 19 'Other' on schedule E and file them W2?

Thanks in advance!!

Lily

Hi. We have several rental property under personal name not LLC yet. My 12 and 14 years old have been helping with rental a lot especially over the summer, they pretty much did all the paintings plus lot other jobs. I've paid them each around $5000 into their own bank account.

I just learned about the wonderful tax benefit for hire kids, my question is -- since our rentals are not LLC owned, thus may not considered as 'business', can I still deduct the money paid to kids out of my rental income? if so, I guess line 19 'Other' on schedule E is the place to go or somewhere else?

Do I need to issue them w2?

Thanks in advance!

Lily