Hiring Your Kids to Save on Taxes: The Family Employment Strategy South Florida Business Owners Are Using

There's a tax strategy hiding in plain sight that most Fort Lauderdale and South Florida business owners completely overlook — and it involves the people sitting at your dinner table.

If you have children under 18 and own an unincorporated business (sole proprietorship, single-member LLC, or husband-wife partnership), the IRS lets you hire your kids, pay them a legitimate salary, and deduct it as a business expense — while they pay little to zero federal income tax on the earnings.

For a South Florida family business earning six figures, this can save $4,000 to $8,000+ per year per child.

How Family Employment Works (IRC §3121(b)(3)(A))

The IRS has a specific carve-out for family employment. When a parent's business employs their child under 18, the wages are:

• Exempt from Social Security and Medicare (FICA) taxes — you don't pay the employer's 7.65%, and the child doesn't pay the employee's 7.65%
• Exempt from Federal Unemployment Tax (FUTA) — for children under 21
• Deductible as a business expense — reducing your taxable income dollar for dollar
• Taxed at the child's rate — which is often 0% thanks to the standard deduction

The Math for a Fort Lauderdale Business Owner

Let's say you run a consulting practice in Fort Lauderdale, you're in the 32% federal bracket, and you have two kids ages 12 and 15:

Detail	Per Child	Two Children
Annual salary paid to each child	$14,600	$29,200
Your business deduction	$14,600	$29,200
Your federal tax savings (32%)	$4,672	$9,344
FICA savings (15.3% avoided)	$2,234	$4,468
Child's federal income tax	$0	$0
Total family tax savings	$6,906	$13,812

The $14,600 figure is the 2026 standard deduction — meaning each child earns up to that amount and owes zero federal income tax. And since Florida has no state income tax, the effective rate is truly 0%.

What Jobs Can Your Kids Actually Do?

The IRS requires that the work be legitimate, age-appropriate, and actually performed. Here are real examples South Florida business owners use:

• Social media management — Taking photos, creating content, managing Instagram/TikTok (your teenagers are probably better at this than you)
• Office cleaning and maintenance — Organizing files, cleaning the workspace, shredding documents
• Data entry — Entering receipts, organizing spreadsheets, updating contact lists
• Website testing — Testing website features, reporting bugs, providing feedback
• Photography and videography — Taking product photos, recording video testimonials
• Inventory management — Counting, organizing, labeling inventory
• Event setup — Helping with client events, trade shows, open houses
• Answering phones — Taking messages, scheduling appointments

The key: pay a reasonable wage for the work. If the going rate for social media help in Fort Lauderdale is $15-20/hour, that's what you pay. Don't pay $100/hour to sweep the floor — the IRS will see right through that.

The Rules You Must Follow

This strategy is fully legal, but it requires proper execution:

1. The FICA Exemption Only Applies to Unincorporated Businesses

If your business is a sole proprietorship, single-member LLC (taxed as sole prop), or a partnership where both partners are the child's parents — FICA exemption applies.

If your business is an S-Corp or C-Corp, you can still hire your kids, but FICA taxes apply normally. You still get the income-shifting benefit, but the payroll tax savings are lost.

2. The Work Must Be Real

• The child must actually perform the work
• The work must be legitimate and necessary for the business
• Keep time logs and work descriptions
• The pay must be reasonable for the type of work and the local market

3. Keep Proper Records

• Issue a W-2 to each child (yes, even your 13-year-old)
• Pay by check or direct deposit — never cash
• Keep timesheets documenting hours worked and tasks performed
• Have a written job description on file
• File payroll tax returns (even if FICA is $0, you still need to file)

4. Age Considerations

• Under 18: Exempt from FICA (the big win)
• 18-20: Subject to FICA, but still exempt from FUTA
• 21+: Treated as any other employee

The Power Move: Fund a Roth IRA With Their Earnings

Here's where this strategy gets even better. Once your child has earned income, they're eligible to contribute to a Roth IRA — up to $7,000 per year (2026 limit).

Think about that: a 14-year-old in Fort Lauderdale starts a Roth IRA funded with $7,000/year from legitimate employment. By the time they're 60, that money has had 46 years of tax-free compound growth.

At a 9% average annual return, $7,000 invested at age 14 grows to approximately $366,000 — completely tax-free. Do that for 4 years (ages 14-17), and you're looking at over $1 million in tax-free retirement wealth your child never has to worry about.

You shifted money from your 32% tax bracket, through your child's 0% bracket, into a vehicle that will never be taxed again. That's a triple tax win.

What About the "Kiddie Tax"?

Parents often worry about the kiddie tax (IRC §1(g)), which taxes a child's unearned income (investments, interest, dividends) above $2,500 at the parent's rate.

Good news: the kiddie tax does NOT apply to earned income. Wages your child earns from working in your business are earned income and are taxed at the child's own rate — which is 0% up to the standard deduction.

South Florida Businesses Where This Works Best

• Real estate agents and investors — Kids can help with open house prep, photo staging, social media
• E-commerce businesses — Product photography, inventory, packing, shipping
• Restaurants and retail — Cleaning, stocking, light food prep (age restrictions apply)
• Marketing and creative agencies — Content creation, social media management
• Construction and trades — Office work, organizing materials, job site cleanup (for older teens)
• Medical and dental practices — Filing, data entry, front desk assistance
• Marine industry — Fort Lauderdale's yacht and marine businesses can use kids for detailing, admin work

Common Mistakes to Avoid

• Paying too much: Don't pay your 10-year-old $50/hour. Match the going rate for the work in your area.
• No documentation: The IRS can disallow the deduction entirely if you have no timesheets, job descriptions, or payment records.
• Paying in cash: Always use a bank transfer or check. No paper trail = no deduction.
• Ghost employees: Your child must actually do the work. Paying them for work they didn't perform is fraud.
• Wrong entity type: If you're an S-Corp, you still owe FICA. Consider whether a sole prop or LLC (disregarded entity) makes sense for this specific benefit.

How Much Can You Really Save?

Here's a quick look at potential savings based on your tax bracket:

Your Tax Bracket	Savings Per Child (Salary + FICA)	With 2 Children
24%	~$5,700	~$11,400
32%	~$6,900	~$13,800
35%	~$7,300	~$14,600
37%	~$7,600	~$15,200

These are real dollars back in your pocket — every single year — while teaching your kids about work, responsibility, and money management.

Bottom line: If you're a South Florida business owner with kids, this is one of the simplest, most powerful tax strategies available. Your CPA may not have brought it up, but the IRS code explicitly allows it. Run your free tax assessment to see how family employment fits into your overall strategy.

Related Reading

• S-Corp Election: Save $15,000+ in Self-Employment Tax
• LLC vs S-Corp vs C-Corp: Which Entity Saves the Most?
• Solo 401(k): Shelter $69,000+ Per Year
• QBI Deduction: Save Up to $10,000/Year Before It Expires