Putting Your Child to Work!
Did you know that the tax laws could help you pay for Private School?
Well, not directly, but almost.
Last week, we talked about tax planning and how, if properly done, could save you, the business owner, thousands of dollars. We also talked about choosing the right business entity from which to operate.
As I promised, I’ll share with you how the IRS laws can help you pay a portion of your child’s college tuition or private school tution through a legal business deduction. You’ll be surprised how easy it is when done right.
One of the best known and least used tax planning techniques is to properly hire your family including children into your business. Children as young as 7 years old can work legally in your business. The key is that the job must be real, hours are tracked and salary is paid to the child through his/her own bank account.
How this helps is that up to $5,700 can be paid without the child owning any federal taxes and the next $8,375 is taxed at 10%. This would equal a salary of $14,075 with federal and social security taxes owed of only $1,915. You’d lose out on the $1,000 tax credit but the business deductions would be more than worth it.
The money earned could then be used to pay for private school tuition curtesy of the IRS code and your business. How’s that for “higher education”?
This tax technique can also extend to your spouse. Next week I’ll talk about how hiring your spouse can reduce your health insurance costs.
Through Tax Planning you can get ahead of the IRS and use the immense tax code to your advantage, but you must do your planning during the tax year and not when your returns are being prepared.
Remember, pass this blog post along to help your fellow business owners.
As usual, if I can help you keep more of what you make, give me a call at 301-773-7060.
To Your Financial Health!
Mr. Flemming,
Thank you very much for your post here about paying for a private school. My father owns his own business and recently told me that he heard it is possible to pay for a private school tuition with at least some level of tax deduction. Your post here gives me the exact information I need to get started.
Again, thank you very much.
John Marushin