How Much Can You Pay Your Kids Tax Free

How much can you pay your kids tax free? I'm asked this question all the time by my adult folks who are in the big table working to become millionaires or already are millionaires and they always want to know how do I pay my kids without them having to file tax before they're 18 years old. So let's get to it. How do you hire your kids and actually work on a proper savings what I'm going to say whether it's college or just later life account and I have lots of options and some free apps that I want you to download and we're going to talk about the exact amount how to hire them. The second thing I want to talk about are the income thresholds and more importantly than the expense deductions that can go along with it and by the way my joke is if you don't have kids you should get them they're tax deductible if you do all of this right. And the last thing we'll talk about are just smart financial moves for your kids. To begin this how do you hire your kids and how do you create some sort of a savings? Well number one I'm going to go through the exact rules because every year the IRS is changing their number it used to be $12,555 you'll see that on my channel from 2022. 2023 you can hire up to $13,850 this is your company paying them as a W-2 employee. $14,600 is the new amount for 2024 so just divide $14,600 or like I tell a lot of parents that don't want to do a lot of monthly payroll is just divide the $14,600 by $12,000 and I would do maybe quarterly so cut them like four checks and the reason for that is you want that money getting to work in compounding power. So one of the things I want you to do is get a compounding calculator immediately and I want you to put in $14,600 and let's just say you do that now the amounts might go up in 2025 and however old they are but let's just say for $14,600 you're going to have a little bit of tax taken out and then you want to actually maximize the Roth IRA because with that money you have a W-2 paycheck it legalizes them to get a Roth IRA so you want to get the Roth and get it set. So as you pay them you want to at least pay them which $14,600 is plenty to completely fund their Roth. The balance of that could either go into an account to actually start some savings investment accounts and in the description below I'm giving you a free app called iFlip if you haven't got it go get it get one for you and all your kids and start loading them up. If you become a client when come farther in you're going to get better and better deals at all these different resources that I have but for today it's free and it gets you at least started. So of that $14,600 you have a little tax $7,000 will go to fund completely their Roth for 2024. You always want to fund it as much as you can if you make enough money do it have the I have a whole playlist on how kids can make money and that's all been updated so go grab our playlist and check that out but seriously like these kids can make money and you have to give them some tasks so whatever they do. My kids have typically done marketing I mean typically administrative things my son was willing to get on the phone and set appointments work on calendars work on travel what else can your kids do based on their skill sets. Other legal things just to note and again I'm going to read this so you're really clear payments for services of children under 18 are exempt from social security and medicare taxes so if it's just a sole proprietor or partnership of the child's parents. So as you bring through that income the other income you can do if you want to do more is you can do things through irrevocable trust through life insurance as another way to give more to the kids and put it in their trust they cannot get that until you pass or when the trust defines that that can have that or you can just do gifting. So gifting again it goes up between $15,000 sometimes it drops to $12,000 sometimes it's $17,000 but gifting is another way to start stocking up these kids accounts and get some of the tax away from you and the income you're making. The one thing our tax strategists do we follow the IRS guideline completely which is 81,000 pages of code so make sure you're getting some counsel from our team's mentorship from me on how to do this I've paid my kids since they were born zero years old. The next thing let's talk about is again kids can earn up to $14,600 right as far as income thresholds and the first $1,150 $1,150 of unearned income interest dividends it's not taxed the next $1,150 is taxed at the child's tax rate. So one of the tips that my strategist has worked with my kids for most of their life is under seven is usually a threshold for income that's a little rougher to find. So I always tell parents if you are in a marketing real estate whatever kind of business you're in how can your kids become models and you put them into your marketing you put them on your websites you include them in some sort of a family friendly environment for marketing and then from 7 to 14 obviously there's tasks that are associated and 14 and up they're on their way to adulting so we gotta start growing them up and I am a huge fan if you read my make your kids millionaires book giving kids a credit card around 12 13 years old so yes it is your card you can put an expense limit on it like 250 or 500 whatever you're going to allocate or allow them to spend. A number one I did it earlier for my daughter emergencies needs food needs to buy some whatever she needs to buy for school so she has an ability to continue to move if I'm not available. So some of you you've restricted your kids so far and there's so many cashless places right now you've got to start setting that up and the last thing you want to do is hand your kids a bunch of credit cards at 18 years old as they're walking out the door and they're uneducated and have no idea how to manage it worst thing you could do between 18 and 22 my son was offered over 6,000 solicitations for credit cards over 6,000 in four years so they're going to be pummeled to death you'd better keep it home and start organizing them earlier the better the one thing you have to pay attention to if you're paying through your business or however you're paying whether it's never pay your kids an allowance through one of your companies is that you don't go over that income threshold and get into a taxable rate they'll just have to file earlier tax returns the other mistake that I see a lot of parents make is you're not realizing the insurance cost to an irrevocable trust of them being the beneficiary has to come either from you and or them which again I use a lot of gifting strategies to actually load up their life insurance policies for those irrevocable trusts so again a lot of strategies a lot of things I talk about as you know I call this internet the bathroom wall anybody can write anything there's a lot of misinformation in the health space in the wealth space so pay attention due diligence isn't what websites say about people it's call get on a phone and actually understand the truth of income and taxes we have the best in the world now before I go to my last point I want you to subscribe to this channel be here five days a week we are going on our third year so excited about being here to support you and your families and financial literacy so we have journals you can grab them in the link below also if your kids are excited about making new money and understanding it we do an event once a month you can grab a couple tickets again in the description below for free come to our millionaire intensive and put your kids in the marketplace what a great way for them to understand marketing and sales with those skill sets your kids will be the wealthiest in the world and if you're running a business and you don't have marketing and sales you need to be there because we need to ramp up your revenue now the last point are just smart financial moves like I said go grab an iflip account now if you actually go set up a Roth IRA you can set up a free Roth for your kids at iflip but Roth money is qualified money so your kids would have a personal account and a Roth account so they'd have two iflip accounts you would have a personal account and a Roth account you'd have a personal and maybe a bit of Roth and a business account so again it's not uncommon for people to end up with five six ten iflip accounts because the money is different your personal money is different than qualified money which is Roths and 401ks different than company money that you don't want to pull out and be taxed on so be very mindful and teach your kids draw things out for them I draw them very very clearly out in the book so from the millionaire maker to the make your kids millionaires books there's graphs and drawings in all of my books and go grab them go get them and consume them and we're doing a huge game special we're down to under around 800 games left in my inventory so grab a game there's a huge special in the link below and put it around the kitchen table go play the game and if you need to get warmed up on game playing because it's been a minute and you've been on this lovely device more than you've been out here talking then grab monopoly get a little warm-up act and then put the millionaire maker at your table and really learn those smart financial moves what does it take what are the components that it takes to become a millionaire what do you need to be paying attention to so again grab that compounding calculator if your kids are not excited about money get them excited by doing a compounding calculator and saying if we just put away 14,600 a year minus a little bit in taxes so call it 13 just for easy math 13,000 a year for 20 years at say 12 13 percent what does that get your kids i promise you it's probably going to be upward it's between a half million and a million dollars depending on what you put away you can do this if i can do this remember i'm a farm girl from nebraska if you have any questions go to askloreal.com a-s-k-l-o-r-e-l ask questions make requests and we're here every day