State Specific Question About: NEW YORK (NY)

Question on Hiring Family Members, specifically your son or daughter, this is for a sole proprietorship not set up a biz as I normally just file a schedule E on the 1040

but my question is since my kid (16 years old) was working me this past summer, making about 900 dollars can i also put money into an ira for them?

for those that have done it, do you file a 1099 on your kid at the end of the year? or do you create a ss4 and how do you establish a w2 and all the stuff that makes you a sole propritor. I see you can get an EIN number for free which i just did for the heck of it on the IRS web site. but wonder what you guys have done?

David,

Short version: you can pay your son for legitmate work in/on your business and deduct it as a business expense, same as you pay a repairman or mower. You may pay a reasonable rate for his skill level based on if you had hired anyone to do the task.

A minor can earn up to ($4700??) before needing to file a tax return. (Ask a tax person- my kids are grown so I have not kept up on this)

IRA: son must have "earned income" to place money in an IRA. (From memory...) If he'll put in $1000 per year for the only the next 20 years he will have $1,000,000 at age retirement, compared to 30 years of investing if he starts at age 40 to accumulate $600,000.

Compound interest with time on his side.

David,

Short version: you can pay your son for legitmate work in/on your business and deduct it as a business expense, same as you pay a repairman or mower. You may pay a reasonable rate for his skill level based on if you had hired anyone to do the task.

A minor can earn up to ($4700??) before needing to file a tax return. (Ask a tax person- my kids are grown so I have not kept up on this)

IRA: son must have "earned income" to place money in an IRA. (From memory...) If he'll put in $1000 per year for the only the next 20 years he will have $1,000,000 at age retirement, compared to 30 years of investing if he starts at age 40 to accumulate $600,000.

Compound interest with time on his side.

David,

Short version: you can pay your son for legitmate work in/on your business and deduct it as a business expense, same as you pay a repairman or mower. You may pay a reasonable rate for his skill level based on if you had hired anyone to do the task.

A minor can earn up to ($4700??) before needing to file a tax return. (Ask a tax person- my kids are grown so I have not kept up on this)

IRA: son must have "earned income" to place money in an IRA. (From memory...) If he'll put in $1000 per year for the only the next 20 years he will have $1,000,000 at age retirement, compared to 30 years of investing if he starts at age 40 to accumulate $600,000.

Compound interest with time on his side.

PattyK I actually paid for his trip to Germany this past year, & still works with maintenance tasks & jobs on my properties but yes I'm trying to teach.

As to Brad's 20,000 point, I want him to have money for retirement and 1 million sounds great if I can put money into an IRA or Roth that money before 4.7K is taxed at only 10% verses my 25% tax rate, but wondered how to process with the government since I only file a 1040 schedule e. I keep good records to show earned income so that shouldn't be an issue but just wondered how the process worked.

You can pay your family members between 7 and 17 $4750 per year tax free.

Use your own discretion, but some suggestions:

Make him pay for his own trips and entertainment... out of that same money.

Help him make some investments.