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Question and Answer

Question: “I will hire my 15-year-old daughter to work in my single-member LLC business, and I expect to pay her about $12,000 this year. Do I pay her through payroll checks and file a W-2?”

Answer:  Yes. And W-2 payment is essential. If you pay her on a 1099, she will pay self-employment taxes.

When you pay her on a W-2, neither you nor your daughter pays any Social Security or Medicare taxes  You also don’t pay any unemployment taxes.

1. Your single-member LLC is a “disregarded entity” for federal tax purposes. It’s taxed as a sole proprietorship.  You are the child’s parent, enabling “no Social Security or Medicare taxes” for both your child and your proprietorship.

2. Your daughter has a $12,950 standard deduction. This means she also pays zero tax on earned income up to that amount.[/vc_column_text][us_image image=”3562″][/vc_column][/vc_row]