Put your kids on payroll — deductible for you, tax-free for them

The money is leaving your account either way

You already pay for your kids’ phones, clothes, and gas — with money you’ve been taxed on. If the same kid is sweeping the trailer on Saturdays, you can pay them for real work, deduct every dollar as a business expense, and — as long as their yearly wages stay at or under the standard deduction (just over $16,000 for 2026) — they owe no federal income tax on it.

Your structure changes the size of the win

Sole proprietors, single-member LLCs, and parent-only partnerships get the premium version: wages to your under-18 child skip Social Security and Medicare taxes entirely (and FUTA until 21). S-Corps still get the deduction, but payroll taxes apply — the law sees the child working for a separate entity.

The four rules that make it audit-proof

• Real work: if you’d pay a stranger for it, it counts — truck washing, shop organizing, photos, filing, phones, social media. Household chores don’t. Age rules still apply: no chainsaws or chippers under 18, no driving for the business under 17, no power mowers or trimmers under 16.
• Reasonable pay: what you’d pay anyone else for that job — screenshot local part-time rates as your proof.
• Written records: W-4 and I-9 on file, a simple signed timesheet each pay period, and a W-2 in January (employee, not contractor).
• Real payments: regular payroll from the business account into an account with the child’s name on it. Never cash.

Wages only count in the year actually paid — one December check can’t cover a year of “work,” so start before December 31.

Watch the full breakdown

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