If you are a business owner, have you ever considered hiring your children
to work for you. They will need to actually work to qualify, but this could be very
advantageous to your tax bill. A. Assuming that a child can be claimed as a
dependent, up to $4,300.00 (the maximum basic standard deduction) can be earned free of
federal income tax in 1999; an additional $25,750.00 is taxed at the 15% tax
bracket. If a child is not a dependent, the amount that he can earn tax-free in 1999
is $7,050.00.
B. Income is totally exempt from FICA taxes if the child is under age of 18 and FUTA
taxes if the child is under the age of 21.
C. The child could also shelter $2,000.00 in a regular IRA or invest in a Simple IRA
and enjoy tax free growth of the funds.
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