10/17/2026
Use family employment to teach the full responsibility of earning.
Give a child clear expectations, appropriate supervision, timekeeping habits, and a fair explanation of pay. If saving is part of the lesson, distinguish wages, spending, gifts, and retirement contributions. The business should receive genuine work in return. Document the arrangement so the financial education and any tax treatment are grounded in what actually happened, rather than a desired deduction amount.
Hiring your child begins with real, age-appropriate work and reasonable compensation. Keep a job description, time records, proof of payment, and the required payroll documentation. Employment-tax treatment depends on the employer's structure and the child's age; a rule for a parent's sole proprietorship does not automatically apply to a corporation. There is no universal tax-free payroll amount for every child. Roth IRA contributions require qualifying compensation and are subject to the year's contribution and income rules. Discuss child-labor requirements before assigning duties. The strongest family employment arrangement teaches responsibility while paying fairly for work the business actually needs and can document.
Plan the duties, records, and payroll process before the child begins work.
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