How is it you pay your kids and use as a tax write off legally

by Erica Henson
(New York)

QUESTION:

We live in NY and do family group childcare my own children work around the house and I pay them but how do I use it for a tax write off legally age 9,9,14,

thank you

ANSWER:

Hi Erica,

Paying your minor children for work that they do in your child care home is a business expense. You will need a checking account in your business’ name and documentation of:

-The jobs your children are doing

-How long the jobs take them to do

- A copy of the check you write to your child

- How much is paid for each job

- Year-end total of what you paid them

I know this seems like a lot of documentation, however you want to prove that your child is "employed/working" and you are not just handing them money and calling it a business expense.

Here’s what I was able to do:

When our children were younger and living at home, I paid them weekly with my business account checks for chores that they did for me daily. I had a list of chores I needed them to do – like vacuuming, dusting, cleaning daycare mats, bathrooms, etc… things that pertained to my daycare business. This was a very detailed and documented list that when the task was completed they checked it off. They had to earn the money. If they didn’t work, they didn’t get paid. I kept these lists in my tax documents and was able to claim these payments as a tax deduction. I was able to pay them (at that time) up to $600 per year.

With all this being said please consult your accountant/tax person on the laws in your state. I know that they all vary and I want you to do what is legal in your state.

Thank you for your question and best of luck!

Julie