Quick Answers

Direct answers to the most common questions about hiring your kids and funding their Roth IRA.

Tax

How much can I pay my child tax-free in 2026?
In 2026, you can pay your child up to $16,100 tax-free (the standard deduction). Sole proprietors also save 15.3% in FICA taxes on wages to children under 18.
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Do I need to issue a W-2 for my child?
Yes, you must issue a W-2 to your child at the end of each year they work for you, reporting all wages paid regardless of amount.
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What is reasonable compensation for a child?
Reasonable compensation is what you'd pay an unrelated person for the same work. Typical ranges: $5-8/hr for ages 5-7, $8-12/hr for ages 8-11, $10-18/hr for ages 12+.
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Legal

What age can I hire my child?
There is no federal minimum age for hiring your child in your business. The IRS has accepted children as young as 7. The work must be real and age-appropriate.
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What jobs can kids do for a family business?
Kids can do any age-appropriate work for a family business: filing, data entry, cleaning, inventory, social media, photography, and more. We list 50+ legitimate tasks by age.
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Is hiring your kids legal?
Yes, hiring your kids is completely legal and IRS-approved. The IRS explicitly allows parents to employ their children. Requirements: real work, reasonable pay, proper documentation.
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Business

Can I hire my child if I have an S-Corp?
Yes, you can hire your child through an S-Corp. You can deduct wages as a business expense. However, the FICA exemption does NOT apply—you must pay payroll taxes.
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Roth IRA

How do I prove my child's earned income for Roth IRA?
Prove earned income with employment agreements, work logs with timestamps, payment records, and a W-2. The IRS requires contemporaneous documentation—records created when work was performed.
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Documentation

Can I pay my child in cash?
You can pay your child in cash, but it's not recommended. Cash payments are hard to document and prove in an audit. Use checks, bank transfers, or digital payments for a clear paper trail.
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What records do I need to hire my child?
You need four key documents: employment agreement, contemporaneous work logs, payment records, and a W-2. The IRS requires records created when work occurs, not reconstructed later.
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