Employing Family Members

Understand the unique tax rules and benefits when employing family members in your business. This guide covers tax withholding, Social Security, and Medicare tax requirements, as well as specific provisions for children, spouses, and parents working in a family-owned business. It also highlights the potential tax benefits and the compliance aspects crucial for avoiding IRS scrutiny.

Highlights:

• Child Employees: Rules for tax withholding and exemptions for Social Security and Medicare taxes based on the child’s age.

• Parent Employees: Tax treatment of wages paid to a parent employed by their child, including FUTA tax exemptions.

• Spousal Employment: Understanding when a spouse is considered an employee or a partner, including the implications for Social Security benefits and tax deductions.

• Qualified Joint Ventures: Conditions under which a married couple can elect not to be treated as a partnership for tax purposes, simplifying their tax reporting.