How Much Money Can A Kid Make Before Filing Taxes

How much money can a kid make before filing taxes? I'm going to break that down in detail, and more specifically, parents, we're going to talk about businesses, tax deductions, and why you should just go big right away. So there's five things specifically I'm going to talk about, and it's a lot. First, how do you even start with your kid and with investments? How does that even begin? Number two, why you never, ever, ever, ever pay your kid an allowance. Number three, how do they make money online and offline? It's important that they know the difference between them. Number four, how much can you actually pay your kid without having to file taxes? And I'm going to talk to you exactly about the number that they're going to make when they actually start paying taxes. And it's not an age, it's an amount that you're going to pay them or the company's going to make. So let's begin with this first one on how to make money as a kid as an investment. And parents, this is going to be really up to you. I have made kids millionaires, was on Barbara Walters with many little kids. That little jewelry cap business, that was one of our companies from one of our little kids. The moms quit her job, started a company, started an LLC or an S Corp, I don't remember which one it was. But because the kid wasn't 18, they can't start the company. So some of you parents, you're going to have to do the work. And the reason I bring up starting the business this way is your business in your lifetime could be one of the biggest assets you ever own. And the best things you ever invest in is yourself and your energy to get paid very well for it. I mean, think about all the startups that have happened. Think about the young kids that know tech that, you know, in our era, you're kind of around my age, you still don't even know what half those kids know. They start on a computer. I mean, it's sort of become, you know, pacifier, right? Here's an iPad, here's a phone. Most kids by one or two are on a computer already. So kids have a very different advantage of getting started as investment. I think that they should start a business. You're going to hear it over and over and over in my Make Your Kids Millionaires book. My kids started making money when they were four, five years old, right? They started little businesses, little 21st century lemonade stands. It's not difficult. There's a whole structure to how you do that. Now, if that's not your thing, and you want to just start investing, well, then you're going to get a typical, like, you know, savings account, money market account, start putting money away. Whether you're going to give them the money, or the kid's going to start working for the money, and they're going to start putting money away, they got to start putting it away. My favorite investment for the kids is a Roth IRA, right? But you have to employ them through a corporation. So there's a lot of structure. So I'm going to pause here, and I'm going to say, go to my search bar, because some of you that are just arrived on my channel here today, you're going to have to get caught up. I have a lot of content on corporate structure, tax structure, why have a business, how to live corporate life. So do some search terms. We're going to continue to build playlists around a lot of topics, so you can just binge watch it, all right? Okay. So as you start teaching your kids about investments, I want you to use the word investments, number one, not savings. So savings is like an undefined lump of money. So normally, if you ever were taught anything, you say, let's go down and get a checking account and a savings account. The checking account will have a debit card, and this is how you spend your money, your savings is what you put it away for. Not really. I mean, what's your savings going to make? 0.000010 zeros and a one? I mean, it's not going to make any money. So it's really not investing, it's savings. Let's just eliminate that word and go straight from making money to investing money. So in the link below at the end, I'm going to give you a software that I use and all of our kids use, and they can start picking little stocks, have them walk around the house to the toys they buy, to the technology they use. They can start picking stocks and putting money into a software that algorithmically will make them some money. I think the worst portfolios are doing about 14, 15%. Some of the best ones I've heard of are making 40s, 50s percent. So that's just an easy software. It's not a security. You can start putting money. You can start as low as $50 on a free app. So I'm going to give you that at the end of our video. So again, I'm gonna go back to the business. I still think you parents should start a company with your kids. And when they're 18 years old, the greatest gift you're going to give them at 18 years old, I did it to my son, I will do it for my daughter, is you hand them that business. And they get to go through college inside that company. They get to do a lot inside that company. But you, the parent, gets the tax deductions. So there's an amount you get to pay your kids. And I'll just tell you now, it's $12,000, $12,550 this year before they have to pay taxes. But really, why limit your kid? Some of these kids can make that in a month. And I know some of you parents say, well, I don't even make it in a month. I mean, it's a little over $1,000 a month that they can make before they have to actually do any of that. So why don't you parent just go for it with the kid? So when Logan was four or five years old, we started a little smoothie business. So I had clients coming from all over the world to Lake Tahoe at a conference center there. And it was sort of a built-in business because I had hundreds of students there. And they liked the afternoon snack. He got out of school and he'd have to come over to the building and hang out with all the other people. So why not make some money? So up until 10 years old, I actually bought all the cost of goods. I bought the supplies, the watermelon, the strawberries, the ice, the mixer, all that stuff. And then one of my staff helped him and he'd sell for $3 to $5 and you make money. At 10 was the big wake-up call. He had to learn cost of goods. So you can do that actually earlier. You can do that around eight years old. It's up to you. But cost of goods is when they have to pay for it. So that was a big shock because he used to be able to make, I don't know, hundreds of dollars in a day and then go put it in his little account. Once cost of goods came along, he had to start paying attention to how many, you know, strawberries he was putting in per smoothie, how much ice he was using, how big the cups were, because now you've got to work with margin and you've got to actually pay for the goods. So early on, it's just basic business skills. Now, if you're out there in a parent going, I don't even know this. Well, again, I want you to be here. I want you to subscribe to my channel and have your kids subscribe. This is just Financial Literacy five days a week, Monday through Friday, 10 to 15 minutes a day. You're going to click on the subscription button, hit the notifications. So every day, then you have something to talk about. So it gives you the conversation around the dinner table, the lunch table or on a weekend. What did you learn from Laurel's video? What kind of business do we want to do? Never tell your kids you can't afford anything. You can afford anything you want. You just have to make the money. Here's the other thing with kids, change it up. They're going to get bored really fast. So I would say every three to six months, I mean, the longest I think Logan or Tristan ever had a business was maybe a year and then they change it up and they do something new and they do something new and they do something new. Right now, Tristan's into video editing, right? So she makes our calendars. She made Logan's graduation invitation because he's graduating from college soon. So she actually went online. She put all that together, did all the video editing and she gets paid to do it. It's her job. So it's legitimate business for the company. And when she's 18, guess what? She's going to get that as the greatest 18 year old birthday present you could ever give somebody is really financial independence. And that's what you're going to teach them. So to wrap up, it's an investment piece of the conversation. Let's talk about a debit card and a credit card. It was the first time when Logan was 21 years old, he kind of realized the big, he knew the difference before, but it was interesting because he called me actually from a bar now that he could go to the bar. True story. And he said, mom, you have got to come to Georgia Southern and teach these men about the basics. They're using debit cards, not credit cards. They don't even know the difference. I said, you've got to be kidding. So here's the difference. A debit card comes right into your bank account. So why are you using money when you could use a credit card 30 days? And if you work with us closely, we can get that interest rate down to 0, 1, 2, 3 percent. Once it creeps up to about 8 percent, we got to recycle and get some different cards. Keep that interest rate really low. Better, it's interest free for 30 days. So you use somebody else's money. The benefit also, the biggest benefit of a credit card that no one is talking enough about, it increases your credit. So you personally can qualify for more money if you keep your credit good. But if you're not using your credit card, the financial institutes look at you and say, you're not viable for any more money. So I need you using credit cards properly. You're credit cards at 14. And we were going to walk you through how to do their first application at 18. All right. That's just critical when you work on the investment side. Too many kids blow their credit and they spend most of their college career of the next four years trying to clean up their credit. And they're actually losing all those years of investment. So don't blow that one. Now, let's talk about the next big one. That's kind of my favorite, which is never pay your kid an allowance. See, an allowance is like having a job. Too many parents just kind of pop off $5, $10, $20. And mom and dad are the bank. I was never the bank. We sat down and we said at four, you live here, you have food and water, shelter, everything. So you do home chores. So there's a certain amount of things just because you live here, you have to help with. Right. And that's just learning basic skills and behavior. Then how much money do you want to make? And that's when you get really fun and creative with the kid. And there's age appropriate tasks. For whatever reason, believe it or not, Logan loved taking out the trash. So he would take a big trash bag and go to every room in the house. And that was part of his extra tasks that he negotiated. So as long as he did that every week, I don't remember, it was like $5 or $7. So he could earn doing trash. And then he could earn scooping the driveway because we live in Lake Tahoe and there's lots of snow for six months. Usually he'd have that job. And then he changed to raking the leaves because we had a huge yard. So all those things were extra things that I would pay somebody else to do. Now at four and five and seven and 10, did you do them as good as a professional? No, but you know what? You're teaching your kids skills for a lifetime. So it's never, you can't afford it. It's mom, dad, right? You're going to sit down and say, I want a new iPhone. I want a new iPad. I need to get a bunch of YouTube equipment. I need video equipment. I need to go buy stuff. So how can we make the money? And that's the conversation. And so as a teenager, they can make as much as they want because they're going to earn it by putting together tasks lists. So I actually have a very cool program. Logan and I did it together when he was young. It's called Never Pay Your Kid an Allowance. And I never, ever want you paying your kid an allowance. They can teach them. They can generate whatever they want in their life. They got to have the skills to do it. They got to have the work ethic to do it. And then you guide them at an 18 years old, you hand them that company and now they're off to the races. So inside this task list, let's talk specifically about how they can make money offline and online. So I talked about a lot of offline. Let me give you some fun stories about some online. Some of our kids, like I'll never forget Austin, right? 13 years old. He came into a room and he was super, super savvy on his little smartphone. And this was years and years ago. So he sold adults in the room, a $50 package, and they could call him up to five times to talk about any like way of using the phone. So he, I don't know, he made 500 or thousand bucks and he had all these clients. A couple months later, I remember him calling me. He said, so, well, no one's really using it. They'll call me and they'll ask about how to use an app. They might ask about how to do a backup, or they might ask about one or two things, but they, they really aren't using all five sessions. So should I refund them the parts they're not using? I said, Oh no, no, no, no. They don't refund. You use it or lose it. So you just need to send out a little communication to your clients at 13 years old and say, you're going to use it or lose it. You know, I said, well, the one thing you didn't do, what you could have done, and I said, but you're going to do it now is put an expiration on it. And so then you get a reoccurring client and they get up to five phone calls for $50. I think he did that business for three or four years. Super fun, super easy. I had another client, Bryce. I don't know. He probably made $13,000 setting up basic social channels for people. Sometimes they don't even know how to get on Facebook, believe it or not. Your grandparents don't know how they, and a lot of you do this for free. Put those as tasks and then never pay your kids an allowance section. Let them do a lot of your online. The other thing I told you, like I said, my, like my daughter does all of our Christmas cards. She did Logan's graduation card. She does our company calendars. Now Logan only did that for about a minute. Otherwise I had outsourced that to somebody to do it. So I'd rather have that paid as one of the tasks that happened on the never pay your kids an allowance. So there's tons of online. There's tons of offline. Make sure you do all your parent controls and you keep it safe because you know, also as teenagers, there's some illegal things. Well, they're actually legal. And I actually coach some of them, but parents oversee this. I'll just say that and we'll leave it right there. So at the end of this video, I'm going to actually give you a big bonus to get the never pay your kids an allowance program. My daughter and I made a financial filing cabinet. We have all these fun bonuses that we're doing right now. When you get my new book, that's coming out. I'll share with that in a second. So at the end of the video, you're going to get a software. I'm also part of a kid's bank that's coming out in May. So you're going to get that app for free and you'll get on that waiting list and you're gonna get all these bonuses once you do my book. But before that, I want to reinforce to write this down right now, tax-free your kids. You can pay your kids legal from your company, $12,550. After that, they have to start paying taxes. So again, make your choice. Maybe they do that money for free. You can pay up to $15,000 per year as a gift as well. What I did early, early on when they were born is I had them work for the company as models, very legal. You can set that all up in legal contracts. With that W-2, you set up a Roth right away. A Roth funded at $500 a month. That's it, $500 a month because you can only put in 6,000 a year for your kids. You do that year after year after year. If all you did was put that into that investment software, your kids might be millionaires if you've invested it right, but you would have hundreds and hundreds of thousands of dollars put away for that kid at $500 a month. You say, well, I don't have $500 a month. Never pay your kids an allowance. We're going to earn it. We're going to make that money. $500 is only $125 a week. Not tough for any kid that is eight years old or more to make that kind of money. I'm going to be your mentor. I'm going to help you do it. So I want you to click on the link, get my book, Make Your Kids Millionaires. It's not just about being a millionaire. This book is about my two experiments, Logan and Tristan. It's also Kyle's experiments, Bryce and Brett, and all the different things that we tried to have them be entrepreneurial, how they got paid, different jobs, different tasks. It's the summation of zero to 18 and beyond. It's everything that you need to do, right? And if they don't become a millionaire, become a hundred thousandaire. But age specifically, Kyle and I break down at zero, at one, at two, at three, all the way up to 18. What do you do? When do they get bank accounts? When do they get debit cards? It's a massive book. If any of you parents out there ever got the what to expect when you're expecting book because there's no blueprint to raising a kid, well, this is your blueprint. This is a step-by-step checklist, exactly what to do age by age. When you buy the book, it's MakeYourKidsMillionaires.com. I give you $1,500 of bonuses. All those bonuses I just shared with you are going to come right out after you buy my book and put financial literacy in your household. Make sure you stay subscribed and listen every day to this channel. We're going to talk tomorrow.