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You feed the little rugrats. You're supposed to pay them too?

November 30, 2009

Farmers can save taxes for the family by paying their kids, reports Farm CPA Today blog. He says an Iowa farm couple can save up to $8,300 in taxes by putting their four kids on the payroll. The savings come from using the kids lower brackets and because wages paid to farm kids aren't subject to FICA or Medicare tax. They also add this caveat:

Remember, the wages must be based upon actual work done and at a rate similar to rate charged for work done in a farm in your area. You should keep accurate records of the work performed and make sure that you follow all child labor laws for your state and region. Also, the savings may be less in a state where the wages paid to the child would make the income taxable for that state.

Farmers do work their kids, even into adulthood. I know grownup CPAs who go back home in the fall on weekends to help with the harvest. If you trust the kids with the money ("Hey, buy the car if you want, I'm redoing my will this week anyway and if you can afford that car, you don't need any inheritance."), you may as well save the taxes.

Tags: Child labour.Farm CPA Today.

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