This post is part of a 9-part series called “Turn Your Side Hustle Into a Tax-Saving Business.”
In this series, you'll learn how to legally lower your taxes, take advantage of IRS rules, and treat your side hustle like a real business.
Your Kids Can Work for You—And Save You Money
If you’re self-employed and have children, you may be able to legally hire them, pay them a fair wage, and deduct their wages as a business expense.
It’s a win-win:
You reduce your taxable income
Your child learns responsibility
Their income may be tax-free (up to the standard deduction)
Let’s break it down.
Who Can Do This?
This strategy works if you:
Run a sole proprietorship or single-member LLC (NOT an S-corp by default)
Have a child who is under 18 years old
Pay them for real, age-appropriate work
This is not about hiding income—this is legal and encouraged when done correctly.
What Kind of Work Can Kids Do?
It depends on age and maturity. Examples include:
Cleaning your office
Filing, shredding, organizing receipts
Social media help (especially teens!)
Photography for marketing
Packing or shipping products
Website testing or data entry
🚫 Don't fake it. They must actually do the work and get paid fairly for it.
How Much Can You Pay Them?
You must pay a reasonable wage based on what you’d pay someone else to do the job.
In 2024, the standard deduction is $14,600.
If your child earns less than that, they typically won’t owe federal income tax.
So you could:
Pay your child $12,000
Deduct that amount from your business income
They owe zero in income taxes
You save thousands in taxes
Payroll Tax Savings
If your business is a sole proprietorship or LLC taxed as a sole prop, and your child is under 18:
You don’t pay Social Security or Medicare taxes on their wages
You also don’t pay federal unemployment tax (FUTA)
That means you save even more.
⚠️ If you run an S-corp or C-corp, these exemptions don’t apply—you’ll need to withhold payroll taxes like a regular employee.
What Records Should You Keep?
To stay audit-proof:
Have a written job description
Track hours worked and tasks performed
Pay them via check or bank transfer (not cash)
File a W-2 if applicable
Keep their pay in a separate minor’s bank account
You don’t need to overcomplicate it—but treat it like a real job with simple payroll documentation.
Pro Tip: Teach Your Kids to Save or Invest
Help your child:
Open a savings or Roth IRA
Save for college
Learn how to manage money
You’re not just saving taxes—you’re teaching them financial literacy early on.
Final Thoughts
Hiring your kids is one of the most overlooked and family-friendly tax strategies out there. Done properly, it keeps money in the household, lowers your tax bill, and gives your children real-world experience.
That wraps up our 9-part series! If you’ve made it this far, you're serious about treating your hustle like a real business—and saving real money along the way.
👉 Ready to review your setup, deductions, or tax plan?