Should You Pay Your Kids Through Your Business? The Tax-Smart Way to Do It

Want a completely legal way to lower your taxable income, keep more money in the family, and teach your kids the value of work?

Hire them.

If you own a business, paying your children can be a powerful tax strategy—but only if it’s done correctly.

At Golden Tax Relief, we help high-income business owners structure this opportunity the smart way. Here’s what you need to know about paying your kids through your business in 2025.

Why Pay Your Kids?

When done properly, hiring your kids:

• Shifts income from your higher tax bracket to theirs
• Reduces your taxable business income
• Lets your child earn tax-free income (up to a limit)
• Funds Roth IRAs or savings for college
• Keeps more money in the family legally

It’s not just smart—it’s strategic.

How Much Can You Pay Them?

In 2025, the standard deduction for a single filer is $14,600.
That means your child can earn up to $14,600 without paying federal income tax—assuming they have no other income.

If you’re in a 32% bracket, that’s $4,672 in tax savings per child—per year.

📌 Pro tip: Pay them through payroll, not as a contractor. This keeps things clean and compliant.

Minimum Age Requirements

There’s no minimum age in the IRS code—but your child must:

• Actually perform work
• Be old enough to do the job assigned
• Be paid a reasonable wage for their duties

Real examples:

• A 7-year-old can appear in marketing or social media ads
• A 12-year-old can scan documents, organize files, or help with product packaging
• A 16-year-old can update websites, manage spreadsheets, or run errands

IRS Rules You Must Follow

To legally pay your kids through your business:

1. They must be a real employee
2. The work must be legitimate
3. The pay must be reasonable
4. You must document hours and tasks
5. You must issue a W-2 at year-end
6. They must receive actual payments (into a bank or custodial account)

What Businesses Qualify?

The best setup is a sole proprietorship or LLC taxed as a sole prop. In this case, you don’t have to:

• Withhold Social Security or Medicare taxes
• Pay FUTA (federal unemployment tax) if the child is under 21

If your business is an S Corp or C Corp, the rules are stricter—you must run full payroll, including employment taxes.

📌 We can help you structure this properly, depending on your entity.

What Can Your Kids Do with the Money?

Instead of giving your child an allowance, their paycheck can:

• Fund a Roth IRA (great for teenagers with earned income)
• Go toward college savings
• Help teach budgeting, taxes, and investing
• Cover their own hobbies, clothes, devices, or gas

Real Client Story

“I started paying my 13-year-old to help with admin work and social content. With Golden Tax Relief’s help, I cut $6,000 in taxes last year and opened a Roth IRA in her name. She’s learning business—and building wealth.”
— Event planner, Denver CO

What NOT to Do

• Don’t pay your child for doing nothing
• Don’t guess on hours or rates
• Don’t forget to issue a W-2
• Don’t call it “internship” or “training” to avoid documentation

The IRS has audited and penalized families who abused this strategy. Done right, though? It’s a win-win.

Final Thoughts

Hiring your children is one of the most overlooked, IRS-approved strategies for business owners to:

• Lower taxes
• Teach financial literacy
• Build generational wealth

It works best with a plan—and we’ll help you create it.

Want to pay your kids legally and reduce your 2025 taxes? We’ll show you how.

📞 Call 844-229-8936 or visit www.goldentaxrelief.com to get started.