Owners of small businesses should consider hiring their children.
A young person whos claimed as a dependent on their parents return can still have $12,000 of wages in 2019 and pay no income tax. The Standard Deduction offsets the wages.
The parents probably provided more than 50 percent of the basic support of the child (housing, food, clothing, medical and transportation expenses). The parents can still claim the exemption for the child, but dependent exemptions are no longer done (allowed). If the child is younger than age 17, the parents do get a Child Tax Credit of $2,000. That credit directly offsets income tax of the parents.
If the business is a sole owner business, a single member LLC or a partnership owned only by the childs parents, there are no payroll taxes for the child or the employer to pay on the wages.
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