hiring family members: Got your kids on payroll yet? [Hiring family members]
- 09/25/21 04:53 AM
Got your kids on payroll yet? When you hire your under-age-18 child, you shift taxable income from you to your child. Why does hiring family members matter? Because if you're single with taxable income of $40,526 or higher - or married with $81,050 or higher - you're in the 22% (or higher!) federal tax bracket. At the same time, your child is in the 0% tax bracket on the first $12,550 they earn. Think of it this way: $12,550 deduction for you, and no taxable income for your child. Tax strategists call this a "shifting strategy": you shift income downstream from your higher bracket to another family (3 comments)