For certain businesses like office work not requiring risk and safety measures, children may work even if they are under 18 and work for a partnership or sole proprietorship that is controlled by the child's parents. But it's important to confirm if the employment contract is valid.
Minimum Age Requirements
The minimum age a child can legally work depends on both federal and state labor laws, which vary depending on the job and industry. Under federal law, children can begin working in certain non agricultural roles at age 14, while more safety requiring jobs typically require them to be 16 or 18.
However, there are exceptions such as entertainment work like acting that allow even younger participation. In businesses fully owned by a child’s parents, federal law generally permits children of any age to work, provided the work is not in mining, manufacturing, or any occupation considered hazardous by the Labor department.
State laws can be stricter than federal rules, so it’s important to review your state’s specific regulations. Notably, the IRS has accepted children as young as seven or eight to receive wages, as long as the assigned duties are genuinely suited to the capabilities of a child that age.
This highlights the importance of ensuring that any job assigned is age appropriate and legally compliant.
Types of Work Children Can Do
Children shouldn't perform all tasks, particularly when safety regulations are involved. For instance, young children are not permitted to perform fieldwork or duties in risky sectors like auto repair shops.
Employing a twelve year old for this kind of employment would not be allowed by state standards, which normally require employees to be a minimum of 17 in such circumstances. Nonetheless, there are many of jobs that are appropriate for children, especially older ones.
Children in high school can help with modest office activities that don't require physical danger, such as tuitions giving, filing, stuffing envelopes, cleaning, basic data entry, and basic bookkeeping.
How to Put Your Child on Payroll
If you choose to employ your kid in your company, you must adhere to the correct protocols and keep correct documentation in order to meet labor and tax regulations.
Obtain Necessary Permits and Documentation
To legally hire your child, you might need to get work permits or other paperwork, contingent upon your state and the type of business you run. You'll also need to gather the required tax papers, including an I-9 and a W-4, and personal data.
Maintain Accurate Records
Maintain thorough records of the chores your child completes, the hours they work, and their pay. If there is an audit or if there are concerns regarding the validity of their job, this evidence will be essential.
Follow Tax Withholding and Reporting Requirements
You will be in charge of withholding and paying the relevant taxes on your child's salary as their employer, including Medicare and Social Security taxes. Additionally, you must disclose their income on your company tax return and provide them with a W-2 form at the conclusion of the year.
Rules You Must Follow
To maximize this tax play, you must adhere to IRS regulations. Remember these tips to hire your child correctly and save money on taxes.
Real Work
You need to confirm that your child is a legitimate employee. This implies that your youngster needs to work for your company. Your child's work must be necessary and typical.
Their duties should be routine and beneficial, but they don't have to make or break your company. For instance, you might enlist your tech savvy youngster to assist with the website and social media accounts for your company.
Even if the work has nothing to do with your goods or services, your youngster completes routine and beneficial chores for your company. If your youngster performs tasks unrelated to your business, including doing personal errands, they won't be regarded as employees.
It's probable that the IRS may notice and reject your child's earnings deduction. You cannot claim a business deduction by paying your child if they don't actually work for your company. As with other workers, you should draft an employment contract for your child to sign.
Your child's contract should outline the duties you hired them to perform. In this manner, you have documentation demonstrating that your kid is an actual worker.
Reasonable Pay
You must give your children fair money when you hire them. Just because you are related doesn't mean you can give your child a lot of, or less, money. For instance, you employ your kid to perform landscaping for your company. The task costs you $25 per hour.
However, landscapers in your region typically make $10 per hour. It's probably not fair to pay your kid $25 per hour, if you are paying other $10 per hour. Conversely, you ought to provide your kid with similar slot salary.
Your child may be eligible to receive a juvenile minimum wage from you. Workers under the age of twenty are entitled to $4.25 per hour as the federal youth minimum wage. But only the first ninety days of employment are covered by the young minimum wage.
You should raise your child's pay to the standard minimum salary after ninety days. Additionally, you may be required to abide by state minimum wage rules for minors.
Follow child labor laws
You have to abide by child labor rules when you hire youngsters younger than eighteen. The duties that children can perform, the hours they had work, and the compensation they can get are all outlined in child labor regulations.
For instance, professions deemed hazardous can only be performed by 18 years of age or older. During the school year, children under the age of 18 are also forbidden from undertaking (excessive) labor. Generally speaking, ensure that the work is suitable for the kid's age.
Track Hours and Keep Records
The payroll HR should always have complete and accurate payroll records. Hours worked, earnings, and taxes withheld should all be included in payroll records. Provide a basic pay stub to every employee and maintain a record of this information.
If you ever have questions concerning your child, having accurate documents would be helpful. You could show how often your child worked, how much they made, and how much tax you took out of their paychecks.
Issue Proper Paychecks
When earnings are deposited into a kid's bank account, it proves that the youngster was paid. The amount and source of the money will be recorded in the account when wages are deposited. If you give your youngster cash, there won't be a payment record though, hence not advisable.
Tax Forms
Show your youngster the same consideration that you provide to other staff members. This implies that you have to complete the necessary paperwork and abide by employment rules. Employer Identification Numbers (EINs) are required for all.
Your business is identified on tax and business records by your EIN. You should file for an EIN if your kid is the first worker you hire. Have your kids complete the W4 form when you hire them. If you ever require paperwork, maintain these forms on file.
Both you and your kid should complete Form I-9 during the employment process. Form I-9 is used by employers to confirm an employee's identification and eligibility for employment.
Although all employers and workers are required to complete this form, you are aware of your child's identification and eligibility for employment, but document it. Observe any additional IRS document reservation and onboarding requirements. Your child shouldn't receive preferential treatment.
Tax Benefits of Hiring Your Child
For small businesses, having innovative ways to save money may be quite beneficial, particularly in terms of taxes. The tax advantages of hiring your kid are as follows.
Income Shifting
Employing your child might be a wise decision that can help your family company and possibly save you money on taxes. You may move your income from a higher tax band to a lower one by hiring your child, which would essentially cut your total tax obligation.
When your child works for a parent-owned sole proprietorship or partnership, their earnings are excluded from Social Security and Medicare taxes, making this strategy especially beneficial if they are under the age of 18.
Payroll Tax Savings
In 2025, you can pay up to $15,000 to each youngster you hire without their having to pay federal income tax. For single filers, this sum corresponds to the standard deduction. The salaries of your child may potentially be deducted by your company as a business expenditure.
Federal unemployment taxes must be paid on your child's earnings after they turn 21. The child is exempt from taxes on Medicare and Social Security until they turn 18 if you are the single proprietor or partner and both owners are the kid's parents.
Payroll does not have to include contributions from the employer for your children. Furthermore, you are not required to pay federal unemployment taxation on your kid's wages until they are 21.
Retirement Account Opportunities
You can make contributions to a tax-advantaged retirement plan, such a Roth IRA, on your child's behalf if they are receiving income from your company. This might assist them in beginning to save retirement funds at a young age.
Business Matters
Employing family members is one benefit of running your own company. Family employees may, however, be subject to different employment tax rules than ordinary employees. The following details could help you identify some distinctions to consider:
Payments for Domestic Work by a Child in a Parent’s Home
When a child works for their parent in the parent’s private home doing domestic tasks, the wages paid are treated differently than regular employment. These payments aren’t subject to federal income tax withholding unless the work isn’t considered domestic in nature or the setting is not the parent’s household.
Social Security and Medicare taxes do not apply until the child turns 21, and the same age rule applies to the Federal Unemployment Tax Act (FUTA), which also does not apply until the child reaches that age.
This special tax treatment recognizes the family relationship and the informal nature of such employment arrangements.
Payments for a Child Employed by a Parent’s Sole Proprietorship or Family Partnership
When a child is employed by a parent’s sole proprietorship or a partnership where both partners are the child’s parents, the wages paid are still subject to certain employment taxes. Regardless of the child's age, income tax withholding applies to these payments.
Nevertheless, if the kid is younger than 18, taxes on Medicare and Social Security do not apply, and FUTA taxes are not necessary till the kid is 21 years of age or older. Once the child reaches 21, FUTA taxes are applicable, aligning the employment treatment more closely with that of non-family employees.
Payments for a Child Employed by a Corporation, Non-Parent Partnership, or Estate
The tax laws are considerably altered when a kid works for a company, partnership in which some of the members are not parents of the kid, or an estate that includes a deceased parent's property.
In these cases, all wages paid to the child are fully subject to income tax withholding, as well as Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) taxes, no matter how old the child is.
These rules treat the child like any other employee since the business is legally separate from the parent.
Important Statistics in the years 2025 - 2026
As of 2025-2026, about 138 million children (7.8% globally) are involved in child labour, with most working in agriculture (61%), often as unpaid family labour, followed by services (25%) and industry (14%). Boys are slightly more involved than girls, and children aged 5-11 make up 57% of the total.
In the U.S., data is limited due to legal exemptions for family businesses, but trends show 60% of small businesses offering childcare support, while only 30% of family businesses survive to the second generation and 3% to the fourth. Globally, the focus is increasing on child protection and business accountability in supply chains.
In 2025 - 2026, hiring children in a U.S. family business is a powerful tax strategy that shifts income to lower tax brackets, allowing children to earn up to $15,750 (2025) and $16,100 (2026) tax-free. Additional savings come from payroll tax exemptions, where wages to children under 18 can avoid 15.3% FICA taxes and FUTA taxes in qualifying family-owned businesses, significantly reducing overall tax burden.
This strategy can generate substantial savings - for example, a parent in a high tax bracket can save thousands by paying a child tax-free wages - while broader reforms have reduced taxes for millions of small business owners.
However, strict IRS rules apply, requiring legitimate work, reasonable pay, and specific business structures, while globally, many countries are also expanding tax benefits and protections related to family and youth employment.
