A certain calm comes over you anytime you figure out a puzzle. This business owner, a guest on Caleb Hammer's Financial Audit, seems to have that calm in abundance. Only he's not completely right to have it.
The guest told the financial guru that he hasn't filed his taxes in four years, and believes he has cracked the code to avoid paying the Internal Revenue Service by making his kids employees. His 9-year-old son cuts grass. His 13-year-old daughter cuts grass.
And his two youngest children, he says, can model for his advertising. Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake. Here's what it is and 3 simple steps to fix it ASAP Millionaires under 43 hold only 25% of their wealth in stocks.
Here's where their money is actually going Each one, he says, can be paid up to $15,000 a year — tax free for them, while providing him with tax deductibles for his business. When Hammer says the IRS could come for his house, he waves it away: "They could, but they won't," he said. Would it survive an audit?
When asked if a certified public accountant signed off on it, he said "Yes." Most of what the Financial Audit guest describes is a real tax strategy. Parents are allowed to hire their children and gain tax advantages. Never filing those taxes, however, could make matters difficult for him, as shown by current tax law and a Supreme Court ruling from 1985 that explains why he can't necessarily pass blame to his CPA.
Putting your children on the payroll is a genuine move, assuming the work is deemed necessary, age appropriate and payment is in line with the going market rate. Department of Labor DOL lets parents employ their own children under 16, any number of hours, in a business they wholly own — provided it's not manufacturing, mining or a job declared hazardous. The IRS says payments for the services of a child under 18 aren't subject to Social Security and Medicare taxes if the business is a sole proprietorship, or a partnership where each partner is also the child's parent.
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