Hiring Your Kids
A tax saving and character building strategy
How Hiring Your Kids Can Create Smart Tax Savings
Most business owners overlook one of the most powerful tax strategies available to them — hiring their own children.
When structured correctly, this strategy can reduce taxable income, lower overall family taxes, and create financial education opportunities for your kids.
But it has to be done right.
Why This Strategy Works
Salaries and wages paid by your business are a tax deduction — which reduces your taxable business income.
In certain cases:
• Kids under 18 may be exempt from FICA taxes
• Kids under 21 may be exempt from FUTA taxes
• Their income is often taxed at a much lower rate than yours
• They may even fall below the standard deduction threshold
That means money that would have been taxed at your higher rate can legally shift to a lower tax bracket within your family.
That’s strategic tax planning, not loopholes.
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When Kids Are Exempt from FICA & FUTA
To qualify:
✔ The child must be under 18
✔ The business must be a sole proprietorship or LLC taxed as a sole prop
✔ The parent(s) must be the ONLY owner(s)
✔ The child must be paid through payroll and receive a W-2
Structure matters. Documentation matters. Compliance matters.
It’s Not Just About Tax Savings
Hiring your kids can also:
• Teach financial responsibility
• Build work ethic
• Fund Roth IRAs at an early age
• Shift income into a lower tax bracket
• Keep money inside your household instead of sending it to the IRS
Done correctly, this strategy can build generational wealth — not just reduce taxes this year.
As a CPA, I spend most of my time helping business owners reduce taxes, strengthen cash flow, and make smarter financial decisions.
But some of the most powerful strategies aren’t just about saving money — they’re about building legacy.
Hiring your kids, when done properly, is one of those strategies. I’ve seen it reduce family tax burdens, fund Roth IRAs at a young age, and teach children responsibility and financial discipline long before they enter the workforce full-time.
That said, this is not a shortcut or a loophole. It requires proper structure, documentation, payroll compliance, and a clear understanding of the rules. Done incorrectly, it creates risk. Done correctly, it creates opportunity.
My goal is always the same: clarity before action.
If this strategy fits your business and your family goals, we’ll implement it properly. If it doesn’t, we’ll tell you that too. Either way, you’ll leave with a plan — not guesswork.
Your numbers should serve your family’s future.
- Tom Wright, CPA, MST, CFO, Founder
Don’t Guess. Plan.
The IRS allows this strategy — but they expect:
• Reasonable wages
• Legitimate job duties
• Proper payroll reporting
• Clean documentation
When implemented correctly, it’s powerful.
When implemented incorrectly, it’s risky.
That’s why strategy and compliance must go together.
Let’s Evaluate Your Situation
Book a Tax Strategy Review Call and we’ll determine:
• Whether hiring your kids makes financial sense
• What your projected tax savings would be
• What compliance steps are required
• Whether alternative strategies may be more beneficial
No pressure. Just clarity.
Certified QuickBooks ProAdvisors You Can Trust
At Wright CPA’s, we don’t just “use” QuickBooks — we’re certified experts across every major version of the platform. That means no matter how your business is set up, we have the skills and credentials to support you.