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Hiring 9 y.o. daughter for the S corp

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  • #16
    I think that we should form an "employing each other kids" network. I will hire your 9 year old daughter for tele-commuting work and you will hire my children for coincidentally similar pay and hours. This way all of our kids will have paychecks from non-parental sources and we can contribute to our kids roth ira's without worrying about the IRS. Maybe have a zoom camera on in the background while your kid is playing for the number of documented hours to make it legit.

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    • #17
      Originally posted by Kamban View Post

      You waited for 6 whole months to work in the coal mines, carrying a canary down the mine each morning? How has the Roth from those earnings done so far?
      Maybe he was the proverbial canary. Not sure what the IRS ruling on fair market value hazard pay is

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      • #18
        Interestingly, when I was 12 years old, I actually, legitimately, worked for my father's orthodontics practice. He had previously hired out to the daughter of one of his techs to do x-ray tracings and measurements for new and completing patients. She was going off to college, and they needed someone else to do it. He trained me, and I did it for a few years, then my sister took over, and then my father's partner's son, and then, I reprised the role in med school. He would send me the x-rays, and I would return them with the analysis the following week. At some point, they decided to send it to a service that did this for a fee.

        In the meantime, some say that perhaps my affinity for x-rays and radiology started by doing this work when I was twelve.

        I have not met a nine year old that could clean his/her room, let alone a doctor's office.

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        • #19
          Originally posted by VagabondMD View Post
          If I were working for the IRS, I would audit all of these schemes. There is probably other tax dodging to discover.
          There are people who are cheating on there taxes for orders of magnitude more than these people. Doctors hiring their kids is small potatoes as far as what IRS should be focused on, if the goal is reducing the amount of revenue lost to fraud.

          Having said that, I agree that this is wrong. However, I do think the modeling is probably easier to justify because, as stated above, there is actually a market for child models. There is no market for 9-year-old office assistants in any capacity, cleaning or otherwise.

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          • #20
            Originally posted by AR View Post

            There are people who are cheating on there taxes for orders of magnitude more than these people. Doctors hiring their kids is small potatoes as far as what IRS should be focused on, if the goal is reducing the amount of revenue lost to fraud.

            Having said that, I agree that this is wrong. However, I do think the modeling is probably easier to justify because, as stated above, there is actually a market for child models. There is no market for 9-year-old office assistants in any capacity, cleaning or otherwise.
            Agree, but it is low hanging fruit. Plus, people that “bend the rules” in one area are likely to bend them in others.

            Additionally, you are modeling to your children that cheating is cool. Bad all around, IMO. There are better ways to teach children a work ethic, and you can put money into a UTMA account or trust account for them.

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            • #21
              Originally posted by molar roller View Post

              I agree, it's a little high. I originally wrote "kind of high" but changed it to "kind of makes sense" - maybe I shouldn't have.
              FWIW, my kids were a little older (11/13 to present 18/21), and most of their pay was for modeling. I had multiple photoshoots with professional photographers and videographers, and used their images and videos in all my marketing. My CPA felt $1500-2000 per year was reasonable, plus ongoing royalties.
              that sounds a little better i guess.

              i am still with spiritrider that i wouldn't even try the modeling thing. you might get away with it, but i'd be worried.

              i guess it's always going to seem like nothing more than a means to an end when the need fits your kid so perfectly. even with the modeling i think it's so shaky as to be something i wouldn't touch. i guess a probing question would be that if your spouse suddenly wanted you to stop using your kids for your marketing would you go hire child models at the same rate? obviously don't know you but i'd be inclined to doubt that anyone would.

              the only child employment that seems legit is paying them to clean or something like that when they are at an age (15?) where they could conceivably be paid by someone else to do the same work.

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              • #22
                Originally posted by molar roller View Post
                Would modeling fees not fall under IC classification?
                It is not necessarily the role, but the specific facts and circumstances that determines the employee vs. independent contractor (IC) classification.

                While it is common and legitimate for third parties to classify minor models as ICs. It would generally not be legitimate for parents to do so for their business unless that child was also an IC for third parties.

                If unlike the OP, an unincorporated business is solely own by the parent(s). It is counter-productive to classify their minor child as an IC. Over $400 that child would have to pay SE taxes. Where as an employee they and the business would be exempt from FICA taxes and the business exempt from unemployment insurance.

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                • #23
                  I tired to pay my 3 y.o. for yard work last year. I offered him $0.25 per walnut he put in the blue bucket. He picked up 4 before he moved on to something else. I'm pretty sure thats WAAAY more than $15/hr, but I also didn't put $1 into a Roth IRA for him. ¯\_(ツ)_/¯

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                  • #24
                    Originally posted by danesgod View Post
                    I tired to pay my 3 y.o. for yard work last year. I offered him $0.25 per walnut he put in the blue bucket. He picked up 4 before he moved on to something else. I'm pretty sure thats WAAAY more than $15/hr, but I also didn't put $1 into a Roth IRA for him. ¯\_(ツ)_/¯
                    You don't have a walnut roller tool? Totally worth it.. 4yo may even be able to use

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                    • #25
                      Originally posted by MPMD View Post

                      that sounds a little better i guess.

                      i am still with spiritrider that i wouldn't even try the modeling thing. you might get away with it, but i'd be worried.

                      i guess it's always going to seem like nothing more than a means to an end when the need fits your kid so perfectly. even with the modeling i think it's so shaky as to be something i wouldn't touch. i guess a probing question would be that if your spouse suddenly wanted you to stop using your kids for your marketing would you go hire child models at the same rate? obviously don't know you but i'd be inclined to doubt that anyone would.

                      the only child employment that seems legit is paying them to clean or something like that when they are at an age (15?) where they could conceivably be paid by someone else to do the same work.
                      If you're in a major metro, it's actually not that hard to get your kid an actual child modeling gig. My wife has two friends that, for reasons are completely inexplicable to me, really wanted their kids (<4 yrs at the time) to be models. They're pretty normal looking kids, but they got some work in catalogs for some local stores. There are apparently all sorts of auditions for these kinds of things. But you have to be willing to take your kid to them and the kid has to actually be able to follow some basic directions, which at that age is not a given. I doubt either got anywhere near 6K/yr, although the hourly rate was probably pretty high.

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                      • #26
                        Originally posted by childay View Post

                        You don't have a walnut roller tool? Totally worth it.. 4yo may even be able to use
                        Oh my god. I came here to make a joke. Do these work well?

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                        • #27
                          Wow 25 responses so far, the most I've gotten in all my posts he he. Looks like the plane got shot down before take off ha ha, although as far as I can tell, seems like this is a common recommendation from CPAs ..

                          No intention to commit fraud here, really planning on having my daughter do some kind of work. But I get the idea, $6K might be too much for any commoner 9 y.o. (and may seem suspicious to the IRS).

                          Thanks for the feedback guys!

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                          • #28
                            This thread has tended to double down on the negative. However, there are plenty of facts and circumstances of legitimately employing a spouse and/or a child in a business. Part of it may be the the lack of any underlying basis for their employment in the first place.
                            • "I'm toying with the idea of employing my spouse so she can get her own 401K, etc..."
                            • And when that wouldn't work "I'm thinking of hiring my 9 y.o. daughter for my S Corp with the goal of saving on taxes and so she can open a Roth IRA. "I'm thinking of paying her around $6K/year for cleaning the office and some other minor duties I could think of, etc..."
                            It is far easier to justify if a spouse and/or child is/are actually performing business necessary work tasks at a practice. There are plenty of administrative tasks for a spouse to do. While I have no specific knowledge, there must be plenty of menial tasks even a 9 year old can perform freeing up more expensive staff time. This even true to a lesser degree for independent contractors. There are marketing, accounting, administrative tasks (you can make your spouse administrator of a one-participant 401k plan). etc... It is more difficult to justify business necessary tasks for their employment when you are a partner in a partnership.

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                            • #29
                              Originally posted by nephron View Post
                              I think that we should form an "employing each other kids" network. I will hire your 9 year old daughter for tele-commuting work and you will hire my children for coincidentally similar pay and hours. This way all of our kids will have paychecks from non-parental sources and we can contribute to our kids roth ira's without worrying about the IRS. Maybe have a zoom camera on in the background while your kid is playing for the number of documented hours to make it legit.
                              My 6 year old is available for zoom lego lessons. How much you paying? Bids start at 25/hr.

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                              • #30
                                My preteen is gonna help me build a practice website. Those can be pricey on the open market because of tech skills needed. At market rates should be fairly easy to get close to $6000. Ongoing maintenance contract too.

                                Teach your kids tech - pays better than modeling or cleaning!

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