I thought I would pass this little tidbit along for those of us in the States who have a sole prop/LLC/LLP.

If you have kids between 7 and 17, you can put them to work for your business, and not pay SS or Medicare tax on their wages. In addition, you can pay them enough to exactly meet their personal deductions, which is currently $4,750. So... you get a book reduction in net profit of almost $5000 per kid per year -- perhaps more if you get really savvy with IRA's.

Here are some links describing it in more detail:

http://www.reiclub.com/articles/little-tax-deduction
http://www.bankrate.com/brm/news/biz/tax/20011022a.asp
http://moneycentral.msn.com/articles/tax/prepare/1383.asp

For my wife and I this will eliminate 15% SS/medicare tax on the $5000, and bring us down from the 28% bracket into the 15%.

Anthony

Hmm... "Video Game Tester, wage $5000/yr"

Too bad my kid's only two. Blatant age discrimination, there... we made many changes to Hamsterball based on whether he liked watching it or not!

I wonder if you could use that in order to get the tax break? They said the age limit was 7, and I assumed that was because it's hard to really do any work if they are younger than that...

But if you can show that you used his input... I wonder if you could get it through.

And, uh, I never even *thought* about using my kid to test the games! :o I was thinking along the lines of helping out with the daycare and stuff -- good idea!

Anthony