Need Holiday Help? Hire Your Children!

by Teri Cettina on November 22, 2011
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Need an extra hand during the holiday rush? Consider hiring your kids. Children and teenagers can handle many basic tasks, from sweeping floors to taking customers’ orders. It’s often a win-win: You get inexpensive help and a tax deduction, and your kids start learning first-hand about the value of work. Just be sure to follow the legal rules for employing workers younger than 18 years old.

  1. Pick the right projects. The best jobs for your children will depend on their ages, skills, and interests — and your company’s needs, of course. An hour or two of work a day may be enough. Kids ages 10 to 12, or “tweens,” are generally good at simple, repetitive tasks, such as superficial cleaning (sweeping, emptying trash and recycling bins, or wiping computer screens) and administrative duties (stamping, stuffing, or sealing envelopes). Teenagers can often do quite a bit more, including web research (such as finding copyright-free images for your blog or marketing materials); filing, scanning, or photocopying articles and other resources; packing boxes with an adult’s oversight; and taking customers’ food and drink orders.
  2. Invest time in training. Even if your kid is a computer whiz, don’t assume that you can explain a new task once and it’ll get done perfectly. Young people are often very concrete thinkers; if you skip part of an explanation, even a teenager probably won’t fill in the blanks. Plan to demonstrate each task, step by step, at least once. Next, have your child do the task with your help. Then have him do the task completely while you watch and coach a bit. Finally, have your new employee try the task on his own.
  3. Pay your child well. Pay your child a decent wage — and more than the minimum required by federal law — if she’s doing jobs that would normally require you to pay an adult an even higher sum. Of course, your kid should declare her income to the IRS and may owe a small amount of taxes on her earnings. The advantage to you of paying your kid a good rate: Those wages are tax-deductible. The advantage to your kid: She’s motivated to do a good job, so she doesn’t have to go back to babysitting. That said, don’t go overboard. The Internal Revenue Service may take issue with you paying your teen $50 an hour to file and shred papers.
  4. Consider opening a Roth IRA. If you’re paying your kids, say, $25 an hour for web research, consider giving them half their earnings upfront (that’s still a sweet salary for a teenager!) and depositing the other half into Roth IRAs in their names. Children can contribute up to a whopping $5,000 per year to a Roth as long as they have at least that much in earned income (babysitting, dog-walking, working for you) during the year in which the contribution is made. Just for fun, play with the retirement-planning calculators at a site like Dinkytown.net to see how amazingly large your children’s Roth account balances could be when they turn 65! (Don’t you wish someone had opened a Roth for you when you were 15?)
  5. Document your children’s work and hours. Just in case the Internal Revenue Service decides to have a chat with you at some point (a.k.a., audit your business), keep everything on the up and up. Maintain a simple log of your child’s hours and tasks performed each year, just as you would for any other paid employee. It only takes a few minutes, and it could save you hours of hassle down the road.
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