Thursday, August 17th, 2017

Your Kids Can Reduce Your Taxes And Get Rich

0

One often-overlooked tax benefit for business owners is putting their kids to work in their business.

If you are self-employed you can take advantage of this by paying your kids $4,000 each for performing services in your business. The business gets a tax deduction for the compensation and that saves taxes on the parent’s tax return. Also, there is no Social Security or Medicare Taxes due on the wages you pay to your child.

The next step is to open a Roth IRA for the child and contribute the $4000 to the IRA. The child may not withdraw this money until age 59 1/2. The earnings and the amounts contributed grow tax-free and are generally never subject to tax when withdrawn. On the child’s tax return, the child gets no tax deduction for the IRA but the child may not pay tax on the $4000if he or she is at a low enough level of income.

If you do this for 10 years, from age 8 to 18, and the IRA earns an 8% return each year, your child should have around $1.5 million at age 60 and that should grow to over $2 million by age 64.

If you plan to do this, consult with a professional tax advisor first and be sure your children are actually performing services for your business. Also, check that the work is not violating any child labor laws.

The information contained herein is not intended as tax advice. To comply with requirements imposed by the IRS, any information contained in this communication cannot be used for the purpose of avoiding penalties under the Internal Revenue Code.

 

Money is like manure; it’s not worth a thing unless it’s spread around encouraging young things to grow.
Thornton Wilde

Excessive taxation will carry reason & reflection to every man’s door, and particularly in the hour of election.
Thomas Jefferson

Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
Benjamin Franklin

The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Ronald Reagan

Everyone must submit himself to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God.
Romans 13:1

Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also because of conscience. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.
Romans 13:5-7

Then the sons are exempt,” Jesus said to him. “But so that we may not offend them, go to the lake and throw out your line. Take the first fish you catch; open its mouth and you will find a four-drachma coin. Take it and give it to them for my tax and yours.
Matthew 17:26

 


Related Posts:




Thanks for reading!

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!


1 − one =