Hiring Your Kids: The FICA/FUTA Tax Break Explained — Age Limits, Entity Rules & Documentation

In Part 2 of this series, I go deep on the part everyone asks about — the FICA and FUTA payroll tax exemption for hiring your kids. What it's actually worth in dollars, the exact age limits, and — critically — which business structures actually qualify. I cover how the FICA exemption works for wages paid to a child under 18, and the FUTA exemption for wages paid to a child under 21, including a real dollar example so it's not just an abstract rule. Then I break down which entities qualify — sole proprietorships and single-member LLCs taxed as disregarded entities — and which don't, including S-corporations and C-corporations. If you're an S-corp owner, I also walk through a workaround some families use, along with the real limits on when it actually holds up. Finally, I cover the documentation you need in place to protect this exemption if the IRS ever asks questions. This is Part 2 of a 3-part series. In Part 1, I covered the core tax benefit of hiring your kids — income shifting and the standard deduction shield. In Part 3, I'll walk through three real Tax Court cases on hiring your kids — what worked, and what didn't. For educational purposes only. This is not tax, legal, or financial advice — consult a qualified professional about your specific situation. If this was helpful, like, subscribe, and share it with a fellow independent contractor or consultant. #1099 #tax #coaching #taxplanning #familybusiness #selfemployed