Hiring my kid

[Sugaree]

I have a little side-gig selling on eBay.  I don't make a whole lot, maybe $500 a year after expenses.  My kid often goes on sourcing trips with me.  How sketchy would it be if I "hired" him as my assistant?  My Schedule C would show no profit and reduce my tax liability.  He would have income and I could use that income to open a Roth IRA for him.  It seems too easy.  What am I missing?

[DadJokes]

As long as you pay him the same as you would pay an employee, there is nothing sketchy about it. Is he doing $500 worth of work over the course of a year? That seems pretty easy to justify to me, unless he's two and isn't able to contribute anything.

[Sugaree]

As long as you pay him the same as you would pay an employee, there is nothing sketchy about it. Is he doing $500 worth of work over the course of a year? That seems pretty easy to justify to me, unless he's two and isn't able to contribute anything.

He's about five and a half.  He gets drug around on shopping trips with me whether he likes it or not, lol.  The big problem is that he has his dad's hoarding tendencies so he never wants to sell anything.

[DadJokes]

Many small businesses hire their young children for cleaning activities or other small things. I've even seen where someone wrote a book and paid their infant to be on the cover. You can't just say you are dragging him along on trips - you have to be able to show that he is adding value. You would also need to create an employment contract, just as you would with any other employee, and follow child labor laws.

[Sugaree]

Hmm....That's going to be a problem since my state doesn't exempt children of business owners from their child labor laws and children have to be at least 14 to work.

[Plugging Along]

I am not sure the tax laws in the Us, but in Canada $500 on eBay would be immaterial, and not worth even coving through the effort of setting up a properemplyment contract, filing taxes for the kids, which would then come off the dependant credit, and most likely a CRA audit which would also put you ion the audit list for years.  You then have to prove that he was adding or doing something for the business on your behalf.

I would chalk this up to an hobby  or just add it on your return. 

[MrThatsDifferent]

Check out Go Curry Cracker. He’s a global MMM with a successful blog and he “employs” his son as model and he’s a tax wizard who pays virtually nothing on a $100k of income a year.