- Put Your Kid(s) on the Payroll to Avoid Taxes
Put Your Kid(s) on the Payroll to Avoid Taxes
Simple & Effective Tax Management
Many people save on taxes by putting their kids on the payroll, meaning they earn some money in their names. This is a very reliable method of saving taxes, as you do not spend money, as required in other techniques and you also do not invest it elsewhere.
If some work is done in their name less income tax is charged to that income. This is a really nice way of saving income tax as your kid will probably fit in a much lower income role or maybe even void of paying taxes. So, if you put some income in their name, you might be exempt from paying taxes on that income, or at least it would be reduced by quite a bit. As long as you keep the total amount earned to a low figure your kid will be eligible to pay no taxes on the money.
Watch the Tax Brackets
Be warned, however, if your kid is over 18 and you exceed a certain threshold they actually stand to fall into a tax bracket which will require them to pay even more taxes than what you would have paid on the same earning. Generally speaking though, if you keep the amount low and they are not legally an adult you stand to profit here by paying little to no taxes on this money.
Parting Thoughts
Hopefully, now you can see how easily you can put your kid on the payroll and avoid paying taxes on at least a portion of your income. If you need additional clarification on how this works, you can consult a local tax preparation specialist or conduct further research online. Keep in mind that our trusted partner Bench can help you organize your books, maximize your deductions, and efficiently complete your filing this year, offering a special promotion of 50% off your first 6 months. Overall, with careful planning, incorporating your kid into the payroll can be a valuable tool in optimizing your tax management.