Yes, you can legally pay your child to work for your business, allowing you to deduct their wages as a business expense, potentially lowering your taxable income. The work must be legitimate, age-appropriate, and paid at a reasonable rate (what you would pay someone else). The child remains your dependent if you provide over half their support.

How much can I pay my kids to work for me?

The child's earnings are also likely to qualify for favorable tax treatment. As a small business owner, you can pay each child you hire up to $15,000 in 2025 (and $14,600 in 2024) without them owing any federal income tax.

Can I pay my kids and write it off?

Yes, you can hire your kids and deduct what you pay them. AND it's tax FREE to them. Believe it or not, you can hire your kids as EMPLOYEES (not contractors). Not only do you score a deduction for their wages, but they are exempt from payroll taxes too! Watch this videos to learn more about the benefits. For.

Can I pay my adult child to work for me?

Yes, you can legally hire and pay your child to work for you. There is no minimum age someone must be before they can earn a salary. To make sure you are compliant with the IRS: Choose a job that is appropriate for their age.

What is the $600 rule in the IRS?

The IRS $600 rule refers to the previous reporting threshold for Form 1099-K, but recent legislation (the OBBBA in 2025) reverted the requirement for payment apps (like Venmo, PayPal) and online marketplaces to report income to over $20,000 AND 200+ transactions, effectively canceling the phased-in $600 rule, although some changes might still happen for 2024/2025 as the IRS figures it out. This means casual sellers and gig workers are generally not getting 1099-Ks for small amounts anymore, but remember, you still must report all taxable income, even without a form, according to IRS.gov.
 

Hiring Your Children in Your Family Business (Legally, step-by-step)

Do you have to declare money given by parents?

You do not need to declare cash gifts you receive on a self assessment tax return. There may be inheritance tax implications for you and the person who has given you this gift, particularly if the donor (giver) of the cash gift dies within seven years of making the gift.

How much can you pay your kids per year tax free?

Regarding federal income tax, you can hire and pay your child up to $15,750for the year (per child), and they will not be subject to federal income tax for 2025. If your child has other income, even if you pay them up to $15,750, they may still need to file their own tax return if they exceed the filing threshold.

How do I hire my kids as employees?

When hiring your children, have them fill out Form W-4 and state W-4 forms. Keep these forms on file in case you ever need documentation. During the hiring process, you and your child should also fill out Form I-9. Employers use Form I-9 to verify the identity and work eligibility of the employee.

Can I pay my child for chores earned income?

No, chores do not count as earned income. Examples of earned income would be things like lawn mowing, babysitting, dog walking, etc (outside of a W-2 or 1099 job - which would also count but isn't what you're asking about) that your child did.

How much can a child earn without paying income tax?

Key Takeaways

A minor who earns less than $15,750 in 2025 will usually not owe taxes but may choose to file a return to receive a refund of tax withheld from their earnings. A child who earns $1,350 or more (tax year 2025) in "unearned income,” such as dividends or interest, needs to file a tax return.

Can my mom get paid to watch my child while I work?

Parents (and other family members or friends) can be paid for personal care services only through the In-Home Support Services (IHSS) program through a 1915(j) waiver. Parents/guardians who are nurses can also be paid for RN, LPN, or LVN care for their own children through the state Medicaid plan.

How does the new $6000 tax deduction work?

The $6,000 deduction is a new tax break for seniors (age 65+) from the "One, Big, Beautiful Bill" Act (OBBBA) (effective 2025-2028), allowing an extra $6,000 deduction on top of existing ones, reducing taxable income, not a direct refund, with income phase-outs for higher earners. It works by lowering your Adjusted Gross Income (AGI) by $6,000 (or $12,000 for joint filers where both qualify), saving money based on your tax bracket, and applies whether you itemize or take the standard deduction.

What is the $100 000 loophole for family loans?

The "$100,000 loophole" for family loans refers to a tax rule where loans between family members under this amount have favorable tax treatment, limiting the lender's taxable imputed interest income to the borrower's net investment income (NII), or zero if the NII is $1,000 or less, avoiding significant income tax burdens, even on interest-free loans. While it simplifies income tax reporting for the lender, gift tax rules still apply, requiring careful structuring with a written promissory note to prove it's a loan, not a gift, to prevent potential capital loss deductions if the loan defaults. 

Is it better to gift or leave inheritance?

Step-Up in Basis for Inherited Assets

One tax advantage of leaving assets after death is the step-up in basis. This provision allows heirs to inherit assets at their fair market value at the time of death, effectively resetting the capital gains tax to zero for any appreciation during the decedent's lifetime.

Can I just give my son 100k?

Yes, you can gift your son $100,000, but you'll need to file a gift tax return (Form 709) because it exceeds the 2025 annual exclusion of $19,000 per person, though you likely won't pay taxes unless you've already used up your very large lifetime exemption (around $13.99 million for 2025). The recipient son pays no gift tax, and you'll report the amount exceeding the annual limit ($85,000 in this case) against your lifetime exemption, which is a massive amount. 

How does the IRS know if you give a gift?

The IRS primarily learns about gifts through your self-reporting on Form 709 (if you exceed the annual exclusion, currently $19,000 per person in 2025) and through third-party reporting, where banks report large cash transfers (over $10,000) or financial institutions report significant asset transfers, allowing them to cross-reference with your filings or discover unreported gifts during audits. They also check public records and audit estates for unreported lifetime gifts.

Can I give my child money for a down payment on a house?

If your child or family member is purchasing an investment property with a mortgage loan, gift funds are not allowed to be used as part of the down payment. However, if your child is purchasing the property in cash (without a mortgage), they can use gift funds.

What is the IRS $10,000 rule?

The IRS $10,000 rule generally refers to Form 8300, requiring businesses to report cash payments over $10,000 received in a trade or business, to combat money laundering and tax evasion. This applies to single or related transactions within a year, including cash, cashier's checks, money orders, and other cash equivalents, and involves collecting payer info. Banks also report large cash transactions (over $10k) via FinCEN Form 112 (CTR). 

Is Venmo reported to the IRS?

IRS Form 1099-K is a tax document that reports any payments you received through third-party networks like Venmo, PayPal, or Apple Pay. If you receive more than $20,000 in at least 200 transactions through these platforms, you'll likely get a 1099-K.

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