Hopefully I can word this correctly. I heard somewhere that if you own a home business, you can pay your child up to 5,000 per year for work completed around the office. I.e. clean the office, errands, etc. As long as the child is not paid over 5,000, they do not have to pay taxes. Is this correct?
2007-03-20 18:20:36 · 4 answers · asked by gus 2 in Business & Finance ➔ Taxes ➔ United States
Does it also mean the parent who own the businesss can claim the $$$$ as business expense?
2007-03-20 18:45:43 · update #1
Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security, Medicare and FUTA taxes if the trade or business is a sole proprietorship.
For 2007, as long as your child has less than $5,350 of income, he does not have any tax liability and therefore not required to file a tax return.
2007-03-20 23:25:06 · answer #1 · answered by tma 6 · 0⤊ 1⤋
A child who is a dependent can earn up to $5150 in 2006 (other than self-employment) and not owe taxes. The limit is a little higher for 2007, but I'm not sure exactly what it is.
2007-03-20 19:20:56 · answer #2 · answered by Judy 7 · 0⤊ 1⤋
As far as I know anyone that makes under 7,000 a year does not pay taxes.
2007-03-20 18:22:57 · answer #3 · answered by xdivineknightx 2 · 0⤊ 3⤋
I don't know if it varies from state to state, but I believe it's $3000
2007-03-20 18:30:34 · answer #4 · answered by Cutie Patootie 2 · 0⤊ 3⤋