Since adopting our daughter, I have been learning about all the great tax breaks for children. Among them are the Uniform Transfer to Minor Act (UTMA or UGMA), child tax credit and the adoption tax credit.
Here's another great tax break for children: Employ one's child in a family business and the child is not subject to Social Security or medicare taxes, according to the IRS. That's a 15.3% tax savings, 12.4% for Social Security and 2.9% for Medicare in 2007, based on information from the Social Security Administration. In addition, the child's income would be taxed at a lower rate than the parents. The child could also start contributing to an IRA.
Of course, the child must be able to perform the task. For instance, it would be difficult to justify paying a salary to my 2-1/2 year old daughter. However, I expect that a 10 year old would be able to handle some tasks and be an employee.
I am amazed at all the tax breaks available for children and families with children. Perhaps, there will be enough of them to pay for the minimum cost of raising a child:-)
For more on Crossing Generations, check back every Thursday for a new segment.
Photo Credit: morgueFile.com, Mary R. Vogt
Here's another great tax break for children: Employ one's child in a family business and the child is not subject to Social Security or medicare taxes, according to the IRS. That's a 15.3% tax savings, 12.4% for Social Security and 2.9% for Medicare in 2007, based on information from the Social Security Administration. In addition, the child's income would be taxed at a lower rate than the parents. The child could also start contributing to an IRA.
Of course, the child must be able to perform the task. For instance, it would be difficult to justify paying a salary to my 2-1/2 year old daughter. However, I expect that a 10 year old would be able to handle some tasks and be an employee.
I am amazed at all the tax breaks available for children and families with children. Perhaps, there will be enough of them to pay for the minimum cost of raising a child:-)
For more on Crossing Generations, check back every Thursday for a new segment.
Photo Credit: morgueFile.com, Mary R. Vogt
This is not financial advice. Please consult a professional advisor.
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1 comment:
Dimes,
:-)
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