Claiming dependent child as employee for my small business

bobbifosburg
bobbifosburg Member Posts: 1 Newcomer
in Credits/Deductions

I have been paying my over 18 year old child for work she is doing for my small business. What are the rules on this as a deduction?

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  • CoryF
    CoryF FreeTaxUSA Agent Posts: 69

    That is a good question, Bobbi.

    Keeping an accurate record of everything that was paid to the child is the main rule when deducting this wage type expense. This is a common expense located on the Schedule C when completing your tax return reporting. However, you will want to comply with the IRS reporting requirement to complete a 1099-NEC when the total amount of wages exceeds $600 for the year. You can use this resource to file the 1099 tax return. This is further evidence that the wage is legitimate as your 18-year-old child will be required to claim this income on their tax return for the same year.

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