When you want to pay your children out of your real estate business, do you need to put them on the payroll just like a normal employee or is there a way to avoid paying tax, workmans comp and etc? I heard that you can pay each child up to $12500.00 annually but not sure how exactly it works! I appreciate your help in advance. Thanks
Accountant · Franklin, TN · Member since 2023 · 204 posts · 91 votes
2y
You can pay children and use a W-2. That said, it typically does not provide a ton of tax savings unless you pay them from active income. There are costs associated with paying them that eat into your savings.