Family business

When reporting the income of a child working in a family-run business, here are some guidelines to follow:

1. Payments for the services of a child are subject to income tax withholding regardless of age.  If your child earns more than $14,600 in 2024, they need to file their own tax return. This includes wages, tips, and salaries. If under $14,600 the income may be reported under the Income Tab in TurboTax as part of your wages
2. Employment Taxes: If your child works for your family business:
   • Payments for the services of a child under the age 18 are not subject to social security and Medicare taxes.
   • Payments for the services of a child under age 21 are not subject to  FUTA tax.  If the child is 21 years or older, then payments for the services of a child are subject to FUTA taxes.

To report your child's wages in TurboTax, follow these steps:

1. If your child needs to file their own tax return, start a new return in TurboTax.
2. Enter W-2 Information - Under the income section: When prompted, enter the details from your child's W-2 form. TurboTax will guide you through this process.
3. Make sure to indicate that your child can be claimed as a dependent on your tax return.
4. Review and File: TurboTax will help you review the information and file the return.

For more details, check out these resources:

• IRS guidelines on family employees
• TurboTax guide on tax filing requirements for children