Somewhere there is a nine-year-old who has appeared in four hundred of their parent's videos, handed over every unboxing, laughed on cue, and never earned a cent that anyone wrote down. Somewhere else there is a parent who learned that they could have paid that child, deducted it, and watched the family's total tax bill shrink. Then they tried it the lazy way, with a Venmo transfer and a shrug, and discovered that the tax code has a very particular opinion about what counts as a job.

The idea is legitimate. Employing your child in your own business is explicitly recognized in the tax rules. But it is one of the few strategies where the story has to be true before the math works. This article is about both.

Why the math is tempting

Start with how a sole proprietor is taxed. Your net profit is hit twice: income tax at your bracket, and self-employment tax, the 15.3% that covers Social Security and Medicare. A reasonable wage you pay to an employee is a business expense, so it reduces the profit both of those taxes are calculated on.

Now look at the other side of the ledger. A child with no other income can earn up to the standard deduction for a single filer before owing any federal income tax on those wages. In recent years, that figure has been above $15,000. So a dollar that would have been taxed in a parent's bracket can instead land in a bracket of zero.

There is a second, quieter benefit. If your business is a sole proprietorship, or a partnership owned only by the two parents, wages paid to your own child under 18 are exempt from Social Security and Medicare tax. Wages to a child under 21 are also exempt from federal unemployment tax (FUTA). A single-member LLC that you haven't elected to be taxed as a corporation is generally treated as a sole proprietorship for this purpose. If you operate as an S corporation, those exemptions do not apply, which is one reason the structure matters.

The part people skip: it has to be a real job

The IRS does not allow a deduction for an allowance dressed up as payroll. To be deductible, a wage must be ordinary and necessary for the business, paid for services the child actually performed, and reasonable for the work done.

This is where creators have an unusual advantage and an unusual risk. Creator businesses involve real, age-appropriate tasks. They also involve a lot of fuzzy family life that is hard to separate from work.

Tasks that plausibly count, depending on the child's age and ability:

  • Organizing and labeling props, products, or gear
  • Filing and scanning receipts or sorting mail
  • Light editing, captioning, or thumbnail drafts for an older child
  • Scheduling posts, tagging, or moderating comments for a teenager
  • Appearing on camera, when the appearance is genuinely part of the content and the pay is reasonable for it

Tasks that do not count: chores you would assign anyway, being a child in your household while the camera happens to be on, or anything a stranger would never be paid to do. A useful test is to ask whether you would hire an outsider for this task, and what you would pay them. That second answer is the ceiling on your child's wage. Paying a ten-year-old $60 an hour to sort cables will look like what it is.

On-camera work deserves extra care. Several states have laws governing minors who appear in monetized online content, and some require setting aside a share of earnings for the child. Check your state's rules before treating a child's appearances as a paid role.

What a defensible record looks like

If an examiner ever looks at this, they will not be assessing your intentions. They will be looking for evidence that an employment relationship existed. That evidence is mundane and it is entirely within your control:

  • A written job description, even half a page, listing the tasks and why the business needs them.
  • A timesheet showing dates, hours, and what was done. Contemporaneous notes are far more persuasive than a spreadsheet rebuilt in March.
  • Payment that actually moves. Pay by check or transfer into an account in the child's name, and let them control the account. Money that quietly returns to your own account undoes the deduction.
  • Payroll paperwork. You will need a Form W-4 from the child and you will issue a Form W-2 at year-end. Depending on your state, you may also have state withholding or unemployment obligations.
  • A wage rate you can justify, ideally by pointing to what the going rate is for similar work in your area.

The pattern is the same one that runs through nearly every creator deduction: the IRS does not need you to be perfect, it needs you to be able to show your work.

Where it can go wrong

A few traps are worth naming.

First, the child's wages are earned income, so they are not subject to the "kiddie tax" that applies to a child's unearned income such as investment returns. That is good news, but it means the child may still file their own return, and you should not assume you can skip it.

Second, the child can generally still be claimed as your dependent. But the child's own earnings and filing status can affect some credits and rules, so run the numbers rather than assuming nothing else changes.

Third, there is the temptation to overpay because the tax savings feel so large. The savings are real only to the extent the wage is reasonable. An inflated wage can be disallowed, and then you have both the penalty risk and the awkward fact that the money went to a child's account.

Finally, do not forget the opportunity this opens. A child with real earned income can contribute to a Roth IRA, up to the amount they earned, within the annual limit. Those dollars can grow for decades, which turns a modest payroll into something closer to a head start. It is not a given you should do this, but it is worth knowing about.

Your next moves

  • Today: Write down three to five real tasks your child could do for your channel that you would otherwise pay someone for, plus the going hourly rate for each.
  • This week: Confirm your business structure. If you are a sole proprietor or a single-member LLC, the under-18 exemptions from Social Security and Medicare tax apply; if you are an S corp, talk to a tax professional before paying anyone in the family.
  • This week: Open a bank account in your child's name (a custodial or teen checking account) so wages go somewhere the child actually controls.
  • Starting now: Keep a simple timesheet in a shared note or spreadsheet, logging the date, hours, and task each time the work is done.
  • Before the first payment: Have your child fill out a W-4, and look up your state's rules for employing a minor, including any rules about minors in online content.

Where the tracking lives

Everything above comes down to one habit: capturing a small fact at the moment it happens, such as a date, an amount, or a note about what was done, instead of reconstructing it from memory in April. That is the principle behind Aside, an app built to help creators keep their business records as they go, so the proof exists when it's needed. If your tax paperwork tends to pile up until it feels like a weight, you can see how it works at https://aside.lumenlabs.works. Either way, the idea is yours to use: the work has to be real, and the record has to say so.