Tax Minute

YEAR END TAX TIP (1)

With 2022 coming to a close and the kids coming home from college for the holidays, here's a last-minute tax tip that you might want to consider. Before Mr. or Ms. Know-it-all unpack and put you to work doing their laundry, you might want to put them to work in the family business. Here's why! First, it allows you to deduct what you pay them while it shifts income out of your tax bracket and into their tax bracket, which can save you huge dollars! Second, this year, up to $13,850 of what you pay them is tax free, that's free, as in F-R-E-E. In addition, if they want to make a $6,500 "deductible" IRA contribution they can earn up to $20,350 this year and pay zero Federal tax. Or better yet, have them make a $6,500 contribution to a Roth IRA which will go in tax free, grow tax free, and be tax free when they withdraw it. And, if you're self-employed, you don't even have to pay payroll taxes on what you pay them if they're under 18. Oh and don't worry about them taking over the business, they'll be going back to school in a few weeks.

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