Business Information
Parent's Tax Rate Information
Note: State tax rates are auto-populated with 2025 top marginal rates but can be manually adjusted. Combined rate is used for all tax savings calculations.
Tax Optimization Summary
Tax-Free Earnings Threshold 2025: $15,000 (Standard Deduction)
Strategy: Wages paid to children under 18 are FICA-exempt (if proper entity), reducing family's overall tax burden while building children's earned income history.
Market Rate Benchmarks for Common Roles (2025)
| Job Type | Age Range | Typical Rate Range | Notes |
|---|---|---|---|
| Office/Filing Tasks | 10-13 | $10-15/hr | Simple, supervised tasks |
| Data Entry/Admin | 14-15 | $12-18/hr | Basic computer skills |
| Social Media/Marketing | 16-17 | $15-25/hr | Requires skill/creativity |
| Website Maintenance | 16-18 | $20-35/hr | Technical skills required |
| Bookkeeping/Accounting | 17-18 | $18-30/hr | Training/supervision needed |
Child #1 - Employment Documentation
Employee Information
Monthly Work Summary
| Month | Hours Worked | Tasks/Projects Completed | Hourly Rate | Gross Wages | Payment Date | Paid? | Samples? | Timesheet? |
|---|---|---|---|---|---|---|---|---|
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| ANNUAL TOTAL | — | — | ||||||
Automated Compliance Checks
Required Documentation Checklist
Child #2 - Employment Documentation
Employee Information
Monthly Work Summary
| Month | Hours Worked | Tasks/Projects Completed | Hourly Rate | Gross Wages | Payment Date | Paid? | Samples? | Timesheet? |
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| ANNUAL TOTAL | — | — | ||||||
Automated Compliance Checks
Required Documentation Checklist
Annual Summary & Compliance Review
| Child Name | Total Hours | Total Wages Paid | Under 18? | FICA Exempt? | W-2 Issued? |
|---|---|---|---|---|---|
| TOTAL ALL CHILDREN | |||||
Tax Savings Analysis
| Tax Benefit | Calculation | Estimated Savings |
|---|---|---|
| Business Deduction | Total wages × parent's marginal rate | $0 |
| FICA Exemption (if applicable) | Wages to U18 children × 15.3% | $0 |
| Children's Tax-Free Income | Wages up to $15,000 std. ded. | $0 |
| TOTAL ESTIMATED SAVINGS | — | $0 |
Total wages paid should be proportionate to:
- Business gross income (generally no more than 15-20% of revenues)
- Children's ages and capabilities
- Market rates for comparable work
- Realistic hours given school schedules
Current Ratio: N/A
Federal Child Labor Law (FLSA) Compliance Summary
| Age Group | Maximum Hours | Time Restrictions | Prohibited Occupations |
|---|---|---|---|
| Under 14 | Limited hours | Very limited - mostly prohibited except family businesses | Most occupations |
| 14-15 Years | School days: 3hrs/day, 18hrs/wk Non-school: 8hrs/day, 40hrs/wk |
7am-7pm (9pm summer) | Manufacturing, hazardous work, operating machinery |
| 16-17 Years | Unlimited (non-hazardous) | No restrictions | Hazardous occupations only |
| 18+ Years | No restrictions | No restrictions | None |
Note: Children employed by their parents in non-hazardous occupations have exemptions from some FLSA restrictions. However, maintaining reasonable hours appropriate for the child's age is still critical for audit defense.
Overall Advisor Assessment
Certifications
Parent/Business Owner Certification
I certify that the information documented above is accurate and complete. The children listed performed actual work as described, were paid reasonable wages for services rendered, all work was documented contemporaneously, and employment complies with applicable child labor laws. I understand that false claims may result in penalties and legal consequences.
Tax Advisor Review
I have reviewed the employment documentation above and confirmed that: (1) wages appear reasonable for work performed, (2) required documentation is on file, (3) employment complies with IRS requirements and child labor laws, (4) FICA exemption status is correctly applied, and (5) this workpaper is complete and retained with client tax records.