Paying 7y/o son as household worker

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Topic Author
Cassera
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Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 3:32 pm

I wanted to know if I can pay my 7yo son as a household worker personally to Supervise his 2 y/o sister, and do work around the house (I rent) outside of regular chores.
I dont own a business. I am an employee and so is my wife.

I want him to have earned income so he can open up a Roth IRA, and am trying to find ways he can legitimately earn income.

Is it possible to do this outside of a business? I hear that the IRS allows children as young as 7 to make earned income working for their parents business for legitimate tasks. But I dont hear anything outside of a business
(Like Supervising his younger sister while I cook and clean, or doing laundry)

oldfatguy
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Re: Paying 7y/o son as household worker

Post by oldfatguy » Sat Aug 01, 2020 3:38 pm

If your son isn't available will you hire another child to perform the task?

oldfort
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Re: Paying 7y/o son as household worker

Post by oldfort » Sat Aug 01, 2020 3:39 pm

I wouldn't touch this with a ten foot pole. If your 7-year old isn't truly babysitting and supervising the 2-year old, it seems like tax fraud. If you truly let a 7-year-old supervise and be responsible for a 2-year-old, in most places, this would be more than sufficient for child protective services to launch an investigation for child neglect.

Topic Author
Cassera
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Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 3:42 pm

Obviously I will be home and within eye sight. More like a helper. Hard to believe CPS would be called if I'm home with my children, but okay. Maybe I should have clarified and said help with childcare related things. Theres a reason why I didnt say babysit.
Moving on...what about other tasks?

And no, I wouldnt hire another child, I would hire a helper to help us with our current household if my son was unable to do it.
Last edited by Cassera on Sat Aug 01, 2020 3:50 pm, edited 2 times in total.

palanzo
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Re: Paying 7y/o son as household worker

Post by palanzo » Sat Aug 01, 2020 3:44 pm

Cassera wrote:
Sat Aug 01, 2020 3:42 pm
Obviously I will be home and within eye sight. More like a helper. Hard to believe CPS would be called if I'm home with my children, but okay. Moving on...what about other tasks?

And no, I wouldnt hire another child, I would hire a helper to help us with our current household if I was unable to pay my son for the help.
I think you should also send both children down into the coal mines :mrgreen:

Topic Author
Cassera
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Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 3:47 pm

palanzo wrote:
Sat Aug 01, 2020 3:44 pm
Cassera wrote:
Sat Aug 01, 2020 3:42 pm
Obviously I will be home and within eye sight. More like a helper. Hard to believe CPS would be called if I'm home with my children, but okay. Moving on...what about other tasks?

And no, I wouldnt hire another child, I would hire a helper to help us with our current household if I was unable to pay my son for the help.
I think you should also send both children down into the coal mines :mrgreen:
🤣🤣🤣

Well, he already helps me now and I do pay him for it. He loves his sister and is more than happy to help.I would love for it to be official earned income though, this way i can set up an IRA for him.

It's not impossible. Child IRA's do exist for even infants and can only be made if children have earned income.

I'm trying to see how i can make this happen Officially, since I am already compensating him.

livesoft
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Re: Paying 7y/o son as household worker

Post by livesoft » Sat Aug 01, 2020 3:50 pm

Wiki This signature message sponsored by sscritic: Learn to fish.

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arcticpineapplecorp.
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Re: Paying 7y/o son as household worker

Post by arcticpineapplecorp. » Sat Aug 01, 2020 3:52 pm

Cassera wrote:
Sat Aug 01, 2020 3:42 pm
Obviously I will be home and within eye sight. More like a helper. Hard to believe CPS would be called if I'm home with my children, but okay. Maybe I should have clarified and said help with childcare related things. Theres a reason why I didnt say babysit.
Moving on...what about other tasks?

And no, I wouldnt hire another child, I would hire a helper to help us with our current household if I was unable to pay my son for the help.
these questions aren't mean to be snarky but to say, "If your child wouldn't normally get hired for these tasks, and/or you wouldn't hire someone else to do these tasks, then do you really think this is legitimate?"

If you wouldn't hire someone else to do this, then why would you pay your child to?
If someone else wouldn't hire a 7 year old to do babysitting, then why would you?

see? It doesn't meet the sniff test. So the IRS will likely find this fishy too, right?

You're asking what else can you pay your son for. But the question really isn't that, but rather:

Are there tasks you actually need done (not just making stuff up) and would pay another to do, and your son can do them and you will pay market wages for?

other than that, get your kid a modeling or acting gig. Then he'd have legitimate wages and you can plow those into Roth IRA, right?

this has been asked many times before:
https://www.google.com/search?sitesearc ... d+for+Roth

let the google be your friend.

(if you insist on "hiring your child" be prepared to provide a 1099. You know how to do that, right?)
Last edited by arcticpineapplecorp. on Sat Aug 01, 2020 3:53 pm, edited 1 time in total.
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tashnewbie
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Re: Paying 7y/o son as household worker

Post by tashnewbie » Sat Aug 01, 2020 3:52 pm

It’s definitely more common to see very young children have earned income for things like modeling.

Your son is not legally able to babysit (most jurisdictions probably require a person be at least 14), so I think it’d be odd if he has legitimate earned income as essentially a babysitter. Also, I think it’s more common to see kids have earned income from family businesses, and general household upkeep is not a separate business.

There was another thread in the last few months about this topic. I’d recommend doing a Google search for it (append :bogleheads.org at the end of the search terms).

oldfort
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Re: Paying 7y/o son as household worker

Post by oldfort » Sat Aug 01, 2020 3:52 pm

Cassera wrote:
Sat Aug 01, 2020 3:42 pm
Obviously I will be home and within eye sight. More like a helper. Hard to believe CPS would be called if I'm home with my children, but okay. Maybe I should have clarified and said help with childcare related things. Theres a reason why I didnt say babysit.
Moving on...what about other tasks?

And no, I wouldnt hire another child, I would hire a helper to help us with our current household if my son was unable to do it.
If you're home with and properly supervising the kids, then I would argue the 7y/o isn't supervising the 2-year-old. It's a fake job.

123
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Re: Paying 7y/o son as household worker

Post by 123 » Sat Aug 01, 2020 3:57 pm

In many cases there are state and local laws and regulations regarding employees (including children) that may be dramatically different from the federal rules so be sure to check those. For example coverage for unemployment benefits (and requirements for payment of unemployment taxes with tax filings) can vary by state.
The closest helping hand is at the end of your own arm.

retiredjg
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Re: Paying 7y/o son as household worker

Post by retiredjg » Sat Aug 01, 2020 3:57 pm

Household work is tricky.

For example, if your spouse were unemployed, can you pay them "earned income" to take out the garbage? Buy the groceries? Or to cut the grass? Or to watch the kids while you work? Probably not. Those things would probably not be considered earned income. They are what people in a family do to maintain a household.

If you can sell your child's artwork or if the child could be a model or participate in a commercial, that would be earned income.

RudyS
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Re: Paying 7y/o son as household worker

Post by RudyS » Sat Aug 01, 2020 3:58 pm

Covid-19 opens up new lines of thought. Take a parent WFH. Kids get in the way of Zoom meetings. Hire someone to keep them in order. That someone COULD be the 7 year old. Not completely "baby-sitting" but a task nevertheless. Not completely in left field.

Have you seen the jokes where the kids, pets, etc., are called "co-workers"?

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Cassera
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Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 4:01 pm

tashnewbie wrote:
Sat Aug 01, 2020 3:52 pm
It’s definitely more common to see very young children have earned income for things like modeling.

Your son is not legally able to babysit (most jurisdictions probably require a person be at least 14), so I think it’d be odd if he has legitimate earned income as essentially a babysitter. Also, I think it’s more common to see kids have earned income from family businesses, and general household upkeep is not a separate business.

There was another thread in the last few months about this topic. I’d recommend doing a Google search for it (append :bogleheads.org at the end of the search terms).
I see what your saying. Yes, we currently have a Nanny who we do pay and helps us while were home as well. So no, I wouldnt hire another person, I would cut the Nanny out and use her only for when we are not there. I would much rather pay my son.

I know for a fact that your child as young as 7 can work in a family business and get paid income. And you cant say, "would you hire another child if you couldn't hire yours".

No I wouldnt use him to Babysit...although New York has no age restriction of being able to babysit or left home alone. But I would never do that because I have common sense.

Triple digit golfer
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Re: Paying 7y/o son as household worker

Post by Triple digit golfer » Sat Aug 01, 2020 4:01 pm

This is ridiculous. Open an IRA when he actually has earned income. Don't devise some scheme to circumvent the law.

egrets
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Re: Paying 7y/o son as household worker

Post by egrets » Sat Aug 01, 2020 4:03 pm

I haven't read all the replies, but we kids used to earn extra money for chores outside of the regular chores we did. No one was running around calling child protective services, all kids in our neighborhood/family did stuff like this. Extra house cleaning, cutting grass, etc. Kids on farms help take care of animals early on.

If it's legal and won't get you in trouble with busybody government people or busybody neighbors or child labor laws, go for it.

Some of the people replying to this thread are probably so young that they think kids all spend their out of school time on back to back "planned activities."
Last edited by egrets on Sat Aug 01, 2020 4:10 pm, edited 1 time in total.

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vineviz
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Re: Paying 7y/o son as household worker

Post by vineviz » Sat Aug 01, 2020 4:08 pm

Cassera wrote:
Sat Aug 01, 2020 4:01 pm
tashnewbie wrote:
Sat Aug 01, 2020 3:52 pm
It’s definitely more common to see very young children have earned income for things like modeling.

Your son is not legally able to babysit (most jurisdictions probably require a person be at least 14), so I think it’d be odd if he has legitimate earned income as essentially a babysitter. Also, I think it’s more common to see kids have earned income from family businesses, and general household upkeep is not a separate business.

There was another thread in the last few months about this topic. I’d recommend doing a Google search for it (append :bogleheads.org at the end of the search terms).
I see what your saying. Yes, we currently have a Nanny who we do pay and helps us while were home as well. So no, I wouldnt hire another person, I would cut the Nanny out and use her only for when we are not there. I would much rather pay my son.

I know for a fact that your child as young as 7 can work in a family business and get paid income. And you cant say, "would you hire another child if you couldn't hire yours".

No I wouldnt use him to Babysit...although New York has no age restriction of being able to babysit or left home alone. But I would never do that because I have common sense.
Unless your family business is babysitting two year children, your in a different ballpark altogether.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Sandtrap
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Re: Paying 7y/o son as household worker

Post by Sandtrap » Sat Aug 01, 2020 4:09 pm

I grew up on a farm so was "paid" for hard work with food and lodging, room and board, by my parents.
(trying to avoid the story of what my dad said one day when I asked for an allowance). . . . .
I earned "real money" collecting returnable bottles under homes and abandoned lots and buildings. 10 cents for some bottles, 15 cents for others, redeemable at the super market.

My sons grew up sweeping and cleaning up on my job sites on the weekends, (or cleaning up after dead beat tenants) also with DW. When young, I paid them by taking them to pick out a movie at Blockbuster Video for family "movie night", or took them to "Game Stop" to play video games. Later, I sometimes paid them a reasonable wage per task out of my pocket. Why sometimes? Because the $$$ was appreciation for their efforts, not a entitled paycheck since everyone pitches in to the family business.

There are so many ways to do these things.
None of them right or wrong.

*7 to watch a 2 ???
Hmmmm.

Hope this is helpful.
j :happy
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oldfort
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Re: Paying 7y/o son as household worker

Post by oldfort » Sat Aug 01, 2020 4:11 pm

egrets wrote:
Sat Aug 01, 2020 4:03 pm
I haven't read all the replies, but we kids used to earn extra money for chores outside of the regular chores we did. No one was running around calling child protective services, all kids in our neighborhood/family did stuff like this. Extra house cleaning, cutting grass, etc. Kids on farms help take care of animals early on.

If it's legal and won't get you in trouble with busybody government people or busybody neighbors or child labor laws, go for it.
Did your parents issue a W2 for the income from household chores, when you were seven? Did they pay the employer's share of FICA taxes, when you were seven? When you were seven, did you file a 1040? If you want to treat something as real job for purposes of a Roth IRA, you have to treat it as a real job for all the other tax requirements.
Last edited by oldfort on Sat Aug 01, 2020 4:12 pm, edited 1 time in total.

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vineviz
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Re: Paying 7y/o son as household worker

Post by vineviz » Sat Aug 01, 2020 4:11 pm

egrets wrote:
Sat Aug 01, 2020 4:03 pm
I haven't read all the replies, but we kids used to earn extra money for chores outside of the regular chores we did. No one was running around calling child protective services, all kids in our neighborhood/family did stuff like this. Extra house cleaning, cutting grass, etc. Kids on farms help take care of animals early on.

If it's legal and won't get you in trouble with busybody government people or busybody neighbors or child labor laws, go for it.
The problem isn’t paying the 7 year old to “babysit”: that’s cool.

The problem is reporting that pay as “earned Income” to the IRS: not cool, and not legal.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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scorcher31
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Re: Paying 7y/o son as household worker

Post by scorcher31 » Sat Aug 01, 2020 4:15 pm

RudyS wrote:
Sat Aug 01, 2020 3:58 pm
Covid-19 opens up new lines of thought. Take a parent WFH. Kids get in the way of Zoom meetings. Hire someone to keep them in order. That someone COULD be the 7 year old. Not completely "baby-sitting" but a task nevertheless. Not completely in left field.

Have you seen the jokes where the kids, pets, etc., are called "co-workers"?
Actually i think this could be reasonable and pass the sniff test in this situation. Very creative Rudy!

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scorcher31
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Re: Paying 7y/o son as household worker

Post by scorcher31 » Sat Aug 01, 2020 4:19 pm

scorcher31 wrote:
Sat Aug 01, 2020 4:15 pm
RudyS wrote:
Sat Aug 01, 2020 3:58 pm
Covid-19 opens up new lines of thought. Take a parent WFH. Kids get in the way of Zoom meetings. Hire someone to keep them in order. That someone COULD be the 7 year old. Not completely "baby-sitting" but a task nevertheless. Not completely in left field.

Have you seen the jokes where the kids, pets, etc., are called "co-workers"?
Actually i think this could be reasonable and pass the sniff test in this situation. Very creative Rudy!
Well actually nevermind. The issue is the 7 year old wouldnt be able to go to school then.

MathIsMyWayr
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Re: Paying 7y/o son as household worker

Post by MathIsMyWayr » Sat Aug 01, 2020 4:21 pm

There are things called laws and there are things called ethics. Why don't you just pay him spending money? He may save or invest whatever left after spending just like ordinary kids.

You joined BH on Sat Aug 01, 2020 1:29 pm. Looks like a fast learner. :greedy
Last edited by MathIsMyWayr on Sat Aug 01, 2020 4:23 pm, edited 1 time in total.

Topic Author
Cassera
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Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 4:23 pm

oldfort wrote:
Sat Aug 01, 2020 4:11 pm
egrets wrote:
Sat Aug 01, 2020 4:03 pm
I haven't read all the replies, but we kids used to earn extra money for chores outside of the regular chores we did. No one was running around calling child protective services, all kids in our neighborhood/family did stuff like this. Extra house cleaning, cutting grass, etc. Kids on farms help take care of animals early on.

If it's legal and won't get you in trouble with busybody government people or busybody neighbors or child labor laws, go for it.
Did your parents issue a W2 for the income from household chores, when you were seven? Did they pay the employer's share of FICA taxes, when you were seven? When you were seven, did you file a 1040? If you want to treat something as real job for purposes of a Roth IRA, you have to treat it as a real job for all the other tax requirements.
You dont Pay FICA taxes when it's your child under 18 and makes less than $12,000 per year and works directly for your business.....and theres nothing wrong with filing a 1040 and issuing a w2....I've done worse at the DMV....


LISTEN EVERYBODY,

I KNOW it can be done through a family business when the child is 7. My question was can it be done outside a business. So all these implications that I'm trying to scam or saying its unheard of, can simply be kept to yourselves.

Either you can or you cant do it. That's all I need to know.

oldfort
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Re: Paying 7y/o son as household worker

Post by oldfort » Sat Aug 01, 2020 4:30 pm

Cassera wrote:
Sat Aug 01, 2020 4:23 pm
oldfort wrote:
Sat Aug 01, 2020 4:11 pm
egrets wrote:
Sat Aug 01, 2020 4:03 pm
I haven't read all the replies, but we kids used to earn extra money for chores outside of the regular chores we did. No one was running around calling child protective services, all kids in our neighborhood/family did stuff like this. Extra house cleaning, cutting grass, etc. Kids on farms help take care of animals early on.

If it's legal and won't get you in trouble with busybody government people or busybody neighbors or child labor laws, go for it.
Did your parents issue a W2 for the income from household chores, when you were seven? Did they pay the employer's share of FICA taxes, when you were seven? When you were seven, did you file a 1040? If you want to treat something as real job for purposes of a Roth IRA, you have to treat it as a real job for all the other tax requirements.
You dont Pay FICA taxes when it's your child under 18 and makes less than $12,000 per year and works directly for your business.....and theres nothing wrong with filing a 1040 and issuing a w2....I've done worse at the DMV....


LISTEN EVERYBODY,

I KNOW it can be done through a family business when the child is 7. My question was can it be done outside a business. So all these implications that I'm trying to scam or saying its unheard of, can simply be kept to yourselves.

Either you can or you cant do it. That's all I need to know.
No, you need a real business, not paying the kid for family chores.

Topic Author
Cassera
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Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 4:32 pm

[/quote]

No, you need a real business, not paying the kid for family chores.
[/quote]

Awesome. Straight to the point. Thank you!

austin757
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Re: Paying 7y/o son as household worker

Post by austin757 » Sat Aug 01, 2020 4:38 pm

I'm picturing you and your son sitting at the kitchen table and negotiating his hourly rate. You give some, he takes some. Like a game of chess lol. It would probably teach him the value of hard work, but I would think most children do this for their parents without being paid. It's just part of growing up and helping out.
Last edited by austin757 on Sat Aug 01, 2020 4:39 pm, edited 1 time in total.

MishkaWorries
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Re: Paying 7y/o son as household worker

Post by MishkaWorries » Sat Aug 01, 2020 4:38 pm

Cassera wrote:
Sat Aug 01, 2020 4:23 pm

LISTEN EVERYBODY,

I KNOW it can be done through a family business when the child is 7. My question was can it be done outside a business. So all these implications that I'm trying to scam or saying its unheard of, can simply be kept to yourselves.

Either you can or you cant do it. That's all I need to know.

Wow. Are you always this rude to random strangers you have asked them to assist you?
We plan. G-d laughs.

retire2022
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Location: NYC

Re: Paying 7y/o son as household worker

Post by retire2022 » Sat Aug 01, 2020 4:47 pm

Op

Read this thread

Here the writer was able to legally report
Mistletoe sales and file taxes

viewtopic.php?f=1&t=267082&hilit=Roth+i ... d#p4307657

ElJefeDelQueso
Posts: 32
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Re: Paying 7y/o son as household worker

Post by ElJefeDelQueso » Sat Aug 01, 2020 4:53 pm

oldfort wrote:
Sat Aug 01, 2020 4:30 pm
Cassera wrote:
Sat Aug 01, 2020 4:23 pm
oldfort wrote:
Sat Aug 01, 2020 4:11 pm
egrets wrote:
Sat Aug 01, 2020 4:03 pm
I haven't read all the replies, but we kids used to earn extra money for chores outside of the regular chores we did. No one was running around calling child protective services, all kids in our neighborhood/family did stuff like this. Extra house cleaning, cutting grass, etc. Kids on farms help take care of animals early on.

If it's legal and won't get you in trouble with busybody government people or busybody neighbors or child labor laws, go for it.
Did your parents issue a W2 for the income from household chores, when you were seven? Did they pay the employer's share of FICA taxes, when you were seven? When you were seven, did you file a 1040? If you want to treat something as real job for purposes of a Roth IRA, you have to treat it as a real job for all the other tax requirements.
You dont Pay FICA taxes when it's your child under 18 and makes less than $12,000 per year and works directly for your business.....and theres nothing wrong with filing a 1040 and issuing a w2....I've done worse at the DMV....


LISTEN EVERYBODY,

I KNOW it can be done through a family business when the child is 7. My question was can it be done outside a business. So all these implications that I'm trying to scam or saying its unheard of, can simply be kept to yourselves.

Either you can or you cant do it. That's all I need to know.
No, you need a real business, not paying the kid for family chores.
Seems like this falls under the description of household employee. I can pay someone outside my household to mow my lawn or I can pay my kid.

Topic Author
Cassera
Posts: 28
Joined: Sat Aug 01, 2020 3:29 pm

Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 4:54 pm

ElJefeDelQueso wrote:
Sat Aug 01, 2020 4:53 pm
oldfort wrote:
Sat Aug 01, 2020 4:30 pm
Cassera wrote:
Sat Aug 01, 2020 4:23 pm
oldfort wrote:
Sat Aug 01, 2020 4:11 pm
egrets wrote:
Sat Aug 01, 2020 4:03 pm
I haven't read all the replies, but we kids used to earn extra money for chores outside of the regular chores we did. No one was running around calling child protective services, all kids in our neighborhood/family did stuff like this. Extra house cleaning, cutting grass, etc. Kids on farms help take care of animals early on.

If it's legal and won't get you in trouble with busybody government people or busybody neighbors or child labor laws, go for it.
Did your parents issue a W2 for the income from household chores, when you were seven? Did they pay the employer's share of FICA taxes, when you were seven? When you were seven, did you file a 1040? If you want to treat something as real job for purposes of a Roth IRA, you have to treat it as a real job for all the other tax requirements.
You dont Pay FICA taxes when it's your child under 18 and makes less than $12,000 per year and works directly for your business.....and theres nothing wrong with filing a 1040 and issuing a w2....I've done worse at the DMV....


LISTEN EVERYBODY,

I KNOW it can be done through a family business when the child is 7. My question was can it be done outside a business. So all these implications that I'm trying to scam or saying its unheard of, can simply be kept to yourselves.

Either you can or you cant do it. That's all I need to know.
No, you need a real business, not paying the kid for family chores.
Seems like this falls under the description of household employee. I can pay someone outside my household to mow my lawn or I can pay my kid.
That's what I was trying to argue....

Topic Author
Cassera
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Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 4:55 pm

retire2022 wrote:
Sat Aug 01, 2020 4:47 pm
Op

Read this thread

Here the writer was able to legally report
Mistletoe sales and file taxes

viewtopic.php?f=1&t=267082&hilit=Roth+i ... d#p4307657
Awesome!! Now THATS a solution!

Dregob
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Re: Paying 7y/o son as household worker

Post by Dregob » Sat Aug 01, 2020 4:55 pm

What's the going rate for a 7 year old?

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vineviz
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Re: Paying 7y/o son as household worker

Post by vineviz » Sat Aug 01, 2020 5:00 pm

Dregob wrote:
Sat Aug 01, 2020 4:55 pm
What's the going rate for a 7 year old?
Bid or ask?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

oldfort
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Re: Paying 7y/o son as household worker

Post by oldfort » Sat Aug 01, 2020 5:35 pm

Cassera wrote:
Sat Aug 01, 2020 4:54 pm
ElJefeDelQueso wrote:
Sat Aug 01, 2020 4:53 pm
oldfort wrote:
Sat Aug 01, 2020 4:30 pm
Cassera wrote:
Sat Aug 01, 2020 4:23 pm
oldfort wrote:
Sat Aug 01, 2020 4:11 pm


Did your parents issue a W2 for the income from household chores, when you were seven? Did they pay the employer's share of FICA taxes, when you were seven? When you were seven, did you file a 1040? If you want to treat something as real job for purposes of a Roth IRA, you have to treat it as a real job for all the other tax requirements.
You dont Pay FICA taxes when it's your child under 18 and makes less than $12,000 per year and works directly for your business.....and theres nothing wrong with filing a 1040 and issuing a w2....I've done worse at the DMV....


LISTEN EVERYBODY,

I KNOW it can be done through a family business when the child is 7. My question was can it be done outside a business. So all these implications that I'm trying to scam or saying its unheard of, can simply be kept to yourselves.

Either you can or you cant do it. That's all I need to know.
No, you need a real business, not paying the kid for family chores.
Seems like this falls under the description of household employee. I can pay someone outside my household to mow my lawn or I can pay my kid.
That's what I was trying to argue....
The issue is the income has to be taxable in order for it to qualify as earned income. The IRS has never considered payments to kids for household chores as taxable income, so it's doubtful this would pass muster as earned income for Roth IRA purposes either. If you paid anyone else outside the family to mow your lawn, then the income they earned would be taxable to them.
Last edited by oldfort on Sat Aug 01, 2020 5:54 pm, edited 3 times in total.

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unclescrooge
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Re: Paying 7y/o son as household worker

Post by unclescrooge » Sat Aug 01, 2020 5:39 pm

palanzo wrote:
Sat Aug 01, 2020 3:44 pm
Cassera wrote:
Sat Aug 01, 2020 3:42 pm
Obviously I will be home and within eye sight. More like a helper. Hard to believe CPS would be called if I'm home with my children, but okay. Moving on...what about other tasks?

And no, I wouldnt hire another child, I would hire a helper to help us with our current household if I was unable to pay my son for the help.
I think you should also send both children down into the coal mines :mrgreen:
There are child labor laws for a reason.

In order to make it legal, you would need to pay someone to watch them at "coal mining camp". :mrgreen:

7eight9
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Re: Paying 7y/o son as household worker

Post by 7eight9 » Sat Aug 01, 2020 5:55 pm

When hiring your own children, you can pay them to do work for your business, but you cannot pay them to do personal household chores.

What is the difference?

A U.S. Tax Court case (T.C. Summary Opinion 2006-127) has shed light on this question.

Michael D. and Christine R. Alexander v. Commissioner, 2006 T.C. Summary Opinion 127
https://www.courtlistener.com/opinion/4 ... missioner/
I guess it all could be much worse. | They could be warming up my hearse.

tibbitts
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Re: Paying 7y/o son as household worker

Post by tibbitts » Sat Aug 01, 2020 6:00 pm

Cassera wrote:
Sat Aug 01, 2020 4:55 pm
retire2022 wrote:
Sat Aug 01, 2020 4:47 pm
Op

Read this thread

Here the writer was able to legally report
Mistletoe sales and file taxes

viewtopic.php?f=1&t=267082&hilit=Roth+i ... d#p4307657
Awesome!! Now THATS a solution!
I don't think it's awesome, although at least in theory the money in that case was coming from operating a business. But as a practical matter, is the purpose here to open a $200 Roth account, or a $6000 Roth account? Is the idea to teach the concepts of various tax-deferred investment vehicles to a 7-year-old (seems like a stretch, but whatever...), or to make contributions that may make a practical difference to the child later in life?

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Cassera
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Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 6:08 pm

7eight9 wrote:
Sat Aug 01, 2020 5:55 pm
When hiring your own children, you can pay them to do work for your business, but you cannot pay them to do personal household chores.

What is the difference?

A U.S. Tax Court case (T.C. Summary Opinion 2006-127) has shed light on this question.

Michael D. and Christine R. Alexander v. Commissioner, 2006 T.C. Summary Opinion 127
https://www.courtlistener.com/opinion/4 ... missioner/
This is very helpful and clearly states exactly what I wanted to do was in fact, not allowed.....thanks!

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Sandtrap
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Re: Paying 7y/o son as household worker

Post by Sandtrap » Sat Aug 01, 2020 6:14 pm

My company had a tax filing category called: outside labor and other hired expenses.
This was for non employees such as day laborers or folks just hired for one particular thing for a day, etc.
I tried to file a 1099 for as many as I could but could never get everyone for various reasons.
My CPA handled that so I don't know the technicals beyond that I was able to do it.
I don't know if a family expense could legally go into that deduction or category.
I do know that some family businesses do that and some don't.

For example: one family business had a category called "Anderson services" and it was a deductible category on the business reports. It included all the money paid out to various family members of different ages who put in time toward the company. It might be as simple as "Little Johnny Anderson" "tubing" loose coins in wrappers for the family laundromats. I doubt that a 1099 was filed for "Little Johnny" so not sure how all that worked. But, a CPA Firm handled all that and it was legit.

This is as close to a real life example that I know personally of that might help you.
Good luck in your efforts.
j :happy

update:
7eight9 wrote: ↑Sat Aug 01, 2020 4:55 pm
When hiring your own children, you can pay them to do work for your business, but you cannot pay them to do personal household chores.

What is the difference?

A U.S. Tax Court case (T.C. Summary Opinion 2006-127) has shed light on this question.

Michael D. and Christine R. Alexander v. Commissioner, 2006 T.C. Summary Opinion 127
https://www.courtlistener.com/opinion/4 ... missioner/
In light of this post that I missed, I can see how this works legally.
Thanks!
Wiki Bogleheads Wiki: Everything You Need to Know

oldfort
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Re: Paying 7y/o son as household worker

Post by oldfort » Sat Aug 01, 2020 6:18 pm

Sandtrap wrote:
Sat Aug 01, 2020 6:14 pm
My company had a tax filing category called: outside labor and other hired expenses.
This was for non employees such as day laborers or folks just hired for one particular thing for a day, etc.
I tried to file a 1099 for as many as I could but could never get everyone for various reasons.
My CPA handled that so I don't know the technicals beyond that I was able to do it.
I don't know if a family expense could legally go into that deduction or category.
I do know that some family businesses do that and some don't.

For example: one family business had a category called "Anderson services" and it was a deductible category on the business reports. It included all the money paid out to various family members of different ages who put in time toward the company. It might be as simple as "Little Johnny Anderson" "tubing" loose coins in wrappers for the family laundromats. I doubt that a 1099 was filed for "Little Johnny" so not sure how all that worked. But, a CPA Firm handled all that and it was legit.

This is as close to a real life example that I know personally of that might help you.
Good luck in your efforts.
j :happy

update:
7eight9 wrote: ↑Sat Aug 01, 2020 4:55 pm
When hiring your own children, you can pay them to do work for your business, but you cannot pay them to do personal household chores.

What is the difference?

A U.S. Tax Court case (T.C. Summary Opinion 2006-127) has shed light on this question.

Michael D. and Christine R. Alexander v. Commissioner, 2006 T.C. Summary Opinion 127
https://www.courtlistener.com/opinion/4 ... missioner/
In light of this post that I missed, I can see how this works legally.
Thanks!
There's a difference between paying them for work at a family laundry mat vs paying them to wash the home towels.

Broken Man 1999
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Re: Paying 7y/o son as household worker

Post by Broken Man 1999 » Sat Aug 01, 2020 6:24 pm

My father owned citrus groves, and my brother and I both worked on Saturdays and during summers.

He paid us well, and we sure worked hard. I never forgot him telling us both that if we didn't get an education, that work was what we had to look forward to.

A great incentive to get an education.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain

Topic Author
Cassera
Posts: 28
Joined: Sat Aug 01, 2020 3:29 pm

Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 6:28 pm

tibbitts wrote:
Sat Aug 01, 2020 6:00 pm
Cassera wrote:
Sat Aug 01, 2020 4:55 pm
retire2022 wrote:
Sat Aug 01, 2020 4:47 pm
Op

Read this thread

Here the writer was able to legally report
Mistletoe sales and file taxes

viewtopic.php?f=1&t=267082&hilit=Roth+i ... d#p4307657
Awesome!! Now THATS a solution!
I don't think it's awesome, although at least in theory the money in that case was coming from operating a business. But as a practical matter, is the purpose here to open a $200 Roth account, or a $6000 Roth account? Is the idea to teach the concepts of various tax-deferred investment vehicles to a 7-year-old (seems like a stretch, but whatever...), or to make contributions that may make a practical difference to the child later in life?
It's both. If I teach him, I would want to actually do it as well.

I want to LEGALLY have him fund his Roth, and after a few years, self direct it to purchasing real estate in an LLC which is funded by his Roth as well as mine and my wife's. I'd like to run a family business inside of our Roth IRA's eventually.

His Roth will not have any significant amounts obviously, but it will benefit from the larger returns from the real estate.

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Sandtrap
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Re: Paying 7y/o son as household worker

Post by Sandtrap » Sat Aug 01, 2020 6:29 pm

Broken Man 1999 wrote:
Sat Aug 01, 2020 6:24 pm
My father owned citrus groves, and my brother and I both worked on Saturdays and during summers.

He paid us well, and we sure worked hard. I never forgot him telling us both that if we didn't get an education, that work was what we had to look forward to.

A great incentive to get an education.

Broken Man 1999
Wow!
Parallels. . . .

My father owned cow farm. Work was after school and weekends, or through the night if a calf was being born. I don't know how many fence post holes I dug but the fence posts were railroad tie throwaways from the train yard. Huge and soaked with creosote oil.

We were not paid nor had an allowance because there was no extra money for that.

A great incentive to strive and achieve.

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

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bottlecap
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Location: Tennessee

Re: Paying 7y/o son as household worker

Post by bottlecap » Sat Aug 01, 2020 6:33 pm

Sometimes financial interest can become an obsession. I think this type of thinking falls in that category. OP, you’re not the first to ask about this, so don’t feel too bad. But you should think about taking a step back.

First, your seven year old is in no way capable of supervising a 2 year old. Clearly you know that, but to put it in perspective, the state or local government would take away both of your kids if you ever "actually" let a 7 year old supervise a 2 year old. Even for a hot minute. If you were ever questioned about this, you’d look like a cheat or a fool, even if you are neither.

Next, two words: record-keeping and taxes. Is it worth the few hundred bucks you could put in an IRA? Heck no.

Enjoy your kids. They have plenty of time to grow up and save. You can always leave them an inheritance.

JT

UpperNwGuy
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Re: Paying 7y/o son as household worker

Post by UpperNwGuy » Sat Aug 01, 2020 6:34 pm

Tax fraud.

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Cassera
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Joined: Sat Aug 01, 2020 3:29 pm

Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 6:42 pm

UpperNwGuy wrote:
Sat Aug 01, 2020 6:34 pm
Tax fraud.
What's tax fraud? Self directing a childs Roth or The household worker part?

UpperNwGuy
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Joined: Sun Oct 08, 2017 7:16 pm

Re: Paying 7y/o son as household worker

Post by UpperNwGuy » Sat Aug 01, 2020 6:48 pm

Cassera wrote:
Sat Aug 01, 2020 6:42 pm
UpperNwGuy wrote:
Sat Aug 01, 2020 6:34 pm
Tax fraud.
What's tax fraud? Self directing a childs Roth or The household worker part?
Trying to create a somewhat phony situation where a 7 year old (who in every state I have lived in would be ineligible for a work permit) inappropriately receives tax benefits not intended for minor children.

Topic Author
Cassera
Posts: 28
Joined: Sat Aug 01, 2020 3:29 pm

Re: Paying 7y/o son as household worker

Post by Cassera » Sat Aug 01, 2020 6:54 pm

UpperNwGuy wrote:
Sat Aug 01, 2020 6:48 pm
Cassera wrote:
Sat Aug 01, 2020 6:42 pm
UpperNwGuy wrote:
Sat Aug 01, 2020 6:34 pm
Tax fraud.
What's tax fraud? Self directing a childs Roth or The household worker part?
Trying to create a somewhat phony situation where a 7 year old (who in every state I have lived in would be ineligible for a work permit) inappropriately receives tax benefits not intended for minor children.
You dont need working papers to work for a family business. The IRS allows children as young as 7 to legally work for their parents business on the books. I had a feeling you had no clue what you were saying when you posted that vague statement...

UpperNwGuy
Posts: 3819
Joined: Sun Oct 08, 2017 7:16 pm

Re: Paying 7y/o son as household worker

Post by UpperNwGuy » Sat Aug 01, 2020 6:56 pm

Cassera wrote:
Sat Aug 01, 2020 6:54 pm
UpperNwGuy wrote:
Sat Aug 01, 2020 6:48 pm
Cassera wrote:
Sat Aug 01, 2020 6:42 pm
UpperNwGuy wrote:
Sat Aug 01, 2020 6:34 pm
Tax fraud.
What's tax fraud? Self directing a childs Roth or The household worker part?
Trying to create a somewhat phony situation where a 7 year old (who in every state I have lived in would be ineligible for a work permit) inappropriately receives tax benefits not intended for minor children.
You dont need working papers to work for a family business. The IRS allows children as young as 7 to legally work for their parents business on the books. I had a feeling you had no clue what you were saying when you posted that vague statement...
You don't have a family business.

Locked