Now that Labor Day is upon us and summer is coming to an end we turn our focus forward. Many of us have children that have just started a new school year. We are starting to think about the holiday season and how we can save money. Did you consider that you still can have an impact on your 2012 taxes? Over the next few weeks we will inform you of some last minute, practical, tax planning tips you can do to have an impact on your return as an individual, business owner or corporation.
In light of the new 2012-2013 class we will focus this week on paying our children for helping with business chores. Do you have children under 18 helping you with your business? Paying them for their chores is a plus for the whole family. Wages paid by the parent to the child for work done in the parent’s business are deductible by the parent and are also exempt from payroll taxes. If your business is a proprietorship or single member LLC you face no payroll taxes on W-2 wages you pay to your child under 18 years of age.
An example is you pay your child $5,000 in wages for work during the year. You can deduct the $5,000 and pocket $2,000 since you are in the 40% tax bracket. Your child can use the 2012 standard deduction to eliminate taxes on up to $5,950 in wages thus your child collects the $5,000 and pays zero taxes. This leaves your family with $2,000 additional money!
Please stay tuned over the next few weeks for more last minute tax planning tips. We will discuss other ways you can impact your 2012 taxes ranging from using your credit card, to buying office equipment, and even buying or selling a vehicle, plus tips for college expenses, and much more.
Please feel free to contact Harvey and Caldwell, PA at 913-451-4400 or visit our website https://www.harveyandcaldwell.com/ as a resource for your tax needs.