Mark Kohler shows how to pay your kids for legitimate work through an LLC, deduct it as a business expense, and have them stash earnings in a Roth IRA tax-free. Since their income stays below the standard deduction, they owe nothing and file nothing.
When my four kids were under age 18, I might have ended up paying them out of my pocket. 17, $18,000 to just pay for all of their stuff. But if I could take a tax write off, how much more powerful would have that been? Maybe I was paying my son, 6, and my twin girls, 4, and Molly, 2. So I'd be at $16,000 here. Oof. Wow. 16 grand. Well, I'd pay a management fee for 16 grand for these outside services. Pay the kids outside labor. No W2, no FICA, no withholding. It's a law that's on the books, very legitimate, and then I zero it out. So I get right off for paying the kids. And since all of them are under the standard deduction, they pay no taxes, they don't even have to file a tax return. Want to go next level? Now, they could take that money and fund a Roth ira. And that Roth IRA could buy crypto. It could even invest in another LLC where we go buy real estate. Now, I'm building college savings and retirement funds through a retirement account, and I got a tax write off to do it. Bam. Pretty cool. Oh, and this little LLC off to the side, I could pay the kids over here too. The only time I need to use this family support company is when I have an S corporation. It's just an added step, and it's no big deal. I've got thousands of clients that have been doing this for years, and I have never, ever, ever in 25 years had a client audited for paying their kids. It's the American way.
The secret to managing your family's future #financialfreedom #estateplanning #shorts
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