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Money previously paid to an outsider now stays within the family.
If the salary is paid to a child, the business may be able to deduct the salary at a top tax rate, while the child reports it at a low tax rate, lowering the family's overall tax bill. You must treat the family member as you would any other employee by paying and reporting applicable employment taxes and offering all fringe benefits offered to other qualified employees. If your sole proprietorship or partnership hires your under age 18 child, your child's payroll may not be subject to Social Security, Medicare or federal and state unemployment taxes. Check into it. Private, long-term care insurance helps pay for the high cost of nursing home care or of home health care.