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Quick Answers

Direct answers to the most common questions about hiring your kids and funding their Roth IRA.

Tax

How much can I pay my child tax-free in 2026?

In 2026, a dependent’s standard deduction is generally earned income plus $450, with a $1,350 minimum and $16,100 maximum. Other income, payroll taxes, filing rules, and state law can change the result.

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Legal

What age can I hire my child?

Federal law has a parental-employment exception for certain nonhazardous work, but prohibited occupations and state child-labor rules still apply. The work must be genuine and age-appropriate.

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Tax

Do I need to issue a W-2 for my child?

Whether you must issue a W-2 depends on the employment context, wages, withholding, and applicable payroll rules. Use the current IRS employer guidance or a payroll professional for your facts.

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Legal

What jobs can kids do for a family business?

Kids can do any age-appropriate work for a family business: filing, data entry, cleaning, inventory, social media, photography, and more. We list 50+ legitimate tasks by age.

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Business

Can I hire my child if I have an S-Corp?

An S-Corp can employ an owner’s child under the applicable rules, but the parent-child FICA/FUTA exceptions generally do not apply. Reasonable wages may be deductible and normal payroll duties remain.

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Roth IRA

How do I prove my child's earned income for Roth IRA?

Keep records supporting eligible compensation, such as timely work logs, payment evidence, agreements, and any required payroll forms. The required evidence depends on the work and filing context.

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Legal

Is hiring your kids legal?

Federal rules recognize family employment, but the tax and labor treatment depends on the child’s age, the work, the business structure, and state law. The work must be genuine, the pay reasonable, and the records accurate.

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Documentation

Can I pay my child in cash?

You can pay your child in cash, but it's not recommended. Cash payments are hard to document and prove in an audit. Use checks, bank transfers, or digital payments for a clear paper trail.

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Documentation

What records do I need to hire my child?

Common supporting records include an agreement, timely work logs, payment evidence, and applicable payroll or tax forms. The complete record set depends on the employment and filing context.

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Tax

What is reasonable compensation for a child?

Reasonable compensation is what you'd pay an unrelated person for the same work. Typical ranges: $5-8/hr for ages 5-7, $8-12/hr for ages 8-11, $10-18/hr for ages 12+.

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