QuickBooks
Family Payroll: Hiring Your Kids

Generally, anyone with children can take advantage of one of the greatest tax saving opportunities granted by Congress. This tax benefit was established by Congress to both encourage home businesses with tax free earnings, and also encourage saving for higher education using tax deferred earnings with Educational Individual Retirement Accounts.

For each child employed in the family business, you are entitled to deduct up to $5950 annually tax free for each child. Just the savings in Federal taxes alone approaches $2,000 for each child. At a recent fireside we were explaining this benefit to a group of firefighters from Los Angeles. We were asked this question at the conclusion of our presentation.

“You mean to tell me that if my son pays my grandson $5,950 per year, and puts the entire $5,950 in a joint bank account with no taxes deducted that my son can turn around and spend the money any way he chooses, and then at the end of the year Uncle Sugar will send us another $2,000.”

I am happy to tell you, that’s exactly how it works.

His response was, “…that makes no sense at all.”

There’s nothing logical or sensible about our tax system, but that’s just one of many benefits available to home-businesses.
Here’s how it works:
  • Dependent children ages 6–18 (up to 23 if students & still working in the business)
  • Pay each child up to $5,950 per year tax free
  • If you write them a check for $495.83 for a month’s work then you deposit $495.83 into a joint account established in their name.
  • You as con-signer can spend the money any way you choose…no restrictions

When you take the $5,950 deduction on your Schedule C, your Federal refund will approach an additional $2,000!!! 🙂

Here’s what you have to do to qualify:
  • Pay them no more and possibly slightly less than you could hire someone to perform the same tasks.
  • Keep time sheets and a log of the duties performed. File quarterly and annual
    payroll reports, for both Federal and state agencies. Issue W2’s at year end.
  • This must be a “real” payroll. It has to be documented and treated accordingly.
Here’s what we can do for you:
  • Provide you with an employment agreement for each family member.
  • Prepare a monthly payroll.
  • Prepare and file all required Federal and State Quarterly and Annual Reports.
  • Give you access to all reports through our simple web interface.
  • Provide sample time sheets you can duplicate.
Basically we offer a turn-key service for $144 per year or $17 per month.

Some states do have some minimal fees even though the payroll is tax exempt.

Ready to come in for an appointment?

Our schedule is very full…but if you call us at (714) 241-0188 or email us we’ll give you two options for coming in right away! We will NOT make dealing with a tax professional as painful as it’s been in the past!

Save On Your Taxes With Tom Bass’s Nine Tax Planning Questions

Tax Pro World is abuzz about the increase of the Social Security wage base standard.Well, I should clarify -- most of Tax Pro World is taking naps this week and not really thinking much about taxes whatsoever, ha! After all, that was one of the most epically intensive...

Nine Crucial Questions To Prepare Orange County Taxpayers For Their 2020 Taxes

First some important reminders for all Orange County taxpayers, then I have a bunch of questions to which I'd like you to respond...Depending on when you read this, the October 15th tax return extension deadline (for families and individuals) is either VERY close, or...

Tax and Financial Planning for Multi-Generational Caretaking for Orange County Families

Say it with me: four more weeks. Four more weeks until this crazy election cycle is behind us and we can all return to normal here in Orange County.Except, well, if it isn't. With the way that 2020 has been going, we might as well emotionally prepare for that...

Trump’s Tax Returns Are Not The Real Story by Tom Bass

Like many things political, one of the best ways to look at the tempest of the day is analytical bemusement. This is (always) especially true when it comes to tax issues.And I might have a take today that could surprise you. I am not interested in getting into...

Now Is The Time For An Estate Plan For Orange County Taxpayers

Right now, it’s almost impossible to escape the conflict, the noise, and the shaming over various cultural decisions we’re having to make. Lockdowns, schooling, more economic stimulus, elections, vaccines — it’s all enough to drive you crazy if you pay close...

Tom Bass’ Guiding Principles For Teaching Kids About Money

However you slice it, the schooling situation right now is tough, with no good options. If you are vehemently in favor of full-on school … well, compassion would dictate that you would recognize that others are having more difficulty with that, for caution’s sake or...

A Strategy For Orange County Taxpayers With A Higher Than Expected Tax Bill

Taking a look around the world these days, and where things seem to be headed… But our heads are high here at Accountable Solutions because we worked our tails off for our Orange County clients this year. We helped a bunch of people save a ton on their taxes — with...

Reflections On The Extended Tax Season By A Local Orange County Tax Professional

I remember at the end of April 2019 that I felt like it had been one of the wildest tax seasons in memory. The TCJA (“Trump Tax Code”) had thrown a ton of curveballs our way, and we were looking forward to implementing tax planning strategies for our Orange County...

The End of Tax Season, Estimated Taxes, And Unemployment Compensation by Tom Bass

I’m still emotionally adjusting to the fact that we just went through 4th of July weekend … and “tax season” is STILL GOING. I’m thankful for it, because I also know that extending the deadline during this wild, intensely difficult year (for so many) was a rare...

Tom Bass’ To-Do List If You Can’t Pay All Your Taxes

Some of our Orange County clients are STILL pulling their paperwork — which is understandable during this donkey of a year, and with all of the new complications. But sadly, ye olde IRS isn’t extending any payment grace in a couple weeks. (I say “sadly”, but here at...