Tax Benefits for Hiring Your Spouse or Kids – Stern, Kory, Sreden & Morgan

Hiring a spouse or children in your business can offer several tax benefits, potentially lowering your overall tax liability while providing financial support to your family members. Here’s a breakdown of the key advantages:
One of the primary benefits of hiring a spouse or children is the ability to shift income to family members who may be in a lower tax bracket. This can be especially beneficial if you’re in a higher tax bracket and your spouse or children earn less income. By paying them a reasonable salary and following IRS regulations, you can reduce your taxable income and lower the overall family tax burden.
Wages paid to a spouse or children are considered business expenses, meaning they are deductible from your business’s income. This can reduce the overall taxable income of your business, leading to potential savings on both business and personal taxes.
When you hire a family member, they can participate in retirement plans such as a 401(k) or IRA, just like any other employee. By contributing to a retirement plan on behalf of your spouse or children, you can provide them with long-term financial security while also reducing your current taxable income.
If you hire your child and they’re under 18, their wages may be exempt from Social Security and Medicare (FICA) taxes if your business is a sole proprietorship or a partnership where both partners are parents. Contact us for more information 661-286-1040 or www.sksm.cpa.