Can I hire my kids through my real estate LLC and pay them as 1099 contractors?

Thanks for this info. I'm a little confused though - my LLC is going to be a single-member LLC so I think that means it's taxed as a sole proprietorship? Does that mean I should put them on payroll instead of 1099? And are there any specific documentation requirements I need to follow?

Since your LLC is a single-member LLC taxed as a sole proprietorship, you're in an ideal position. Put them on payroll instead of issuing 1099s. This way, their wages are exempt from FICA taxes (Social Security and Medicare), though you'll still need to withhold income tax if their earnings exceed the filing threshold. For documentation, keep detailed time sheets showing dates, hours worked, and specific tasks completed. Pay them reasonable wages for the work (what you'd pay another teenager for the same job). Have them fill out W-4 forms, maintain regular pay periods, and provide them with W-2s at year-end. Also take photos of them actually doing the work as additional documentation in case of an audit.

I'm considering doing something similar with my 16-year-old for my vacation rental. Does taxr.ai actually handle specific family employment situations? Or is it more general tax advice? I'm worried about messing up the paperwork and getting flagged.

Seems interesting but what exactly did they tell you that was different from general advice online? I've read mixed things about kids and taxes when it comes to family businesses. Did they give specific guidance on how to properly document the hours and work?

The platform specifically analyzes family employment situations within different business structures. They provided tailored advice for my LLC setup, including which specific exemptions applied to my situation. It's not just generic advice - it's customized based on your business structure. Regarding documentation, they provided actual templates for tracking hours, sample employment agreements specifically designed for family members, and clear guidelines about reasonable compensation based on local rates. Their analysis included exactly which tax forms I needed for my specific state and business situation, plus audit-protection recommendations that went way beyond what I found in online forums.

Wait so what is this exactly? How does Claimyr actually work? Is it just paying for someone to wait on hold for you? That seems weird but I've literally spent hours on hold with the IRS so maybe it's worth it.

This sounds too good to be true. I don't believe anyone can get through to the IRS that quickly during tax season. I've been trying for months about an audit issue. What's the catch here? Is it expensive?

It's a service that uses technology to navigate the IRS phone system and hold your place in line. When they reach an agent, they call you and connect you directly to that agent. No more sitting on hold for hours - you just get a call when an agent is available. The technology works by navigating the complex IRS phone menu system and monitoring the hold status until an agent is available. I was skeptical too until I tried it. For context, I had previously spent over 4 hours on multiple calls trying to get through. With Claimyr, I got connected in 17 minutes while I was making lunch. The IRS agent I spoke with answered all my specific questions about documentation requirements for hiring my kids in my LLC.

Do child labor laws really apply when it's your own kids working in your family business? I thought there were exemptions for that. I've had my 13-year-old helping in our family store for years without any issues.

There are indeed specific exemptions for family businesses, but they vary by state and by the type of business. Federal law has an exemption for children of any age working in a business solely owned by their parents (except in manufacturing, mining, or hazardous occupations). However, state laws can be more restrictive, and real estate businesses sometimes fall into gray areas depending on the exact work being done. For example, in some states, a 15-year-old can paint walls but might be prohibited from using certain power tools or working on ladders above a certain height. It's definitely worth a quick check of your state's department of labor website to see the specific exemptions for your situation.

I've done this for my kids (14 & 16) for the past two years. The key is how your business is structured. In my single-member LLC, I hire them as W-2 employees, not as contractors. They don't pay FICA taxes, and they each contributed about $5,000 to their Roth IRAs last year.

This is really helpful advice! I'm just starting to think about this for my own situation. Quick question - when you mention having them open business checking accounts, do you mean separate accounts just for their work income? Or are you talking about them literally setting up their own small businesses? I want to make sure I understand the best way to structure this from a documentation standpoint. Also, how do you handle the tax withholdings? Do you actually withhold income tax from their paychecks or just let them handle it at year-end since they're probably not earning enough to owe much anyway?

Great question about the checking accounts! I meant separate personal checking accounts just for their work income - not business accounts. This helps keep their employment earnings separate from any allowance or gift money, which makes tax filing cleaner and creates a clear audit trail. For tax withholdings, I actually do withhold a small amount for federal income tax even though they likely won't owe anything. This way they get the experience of receiving a tax refund when they file their returns, which is a good learning opportunity. Plus it ensures we're following proper payroll procedures. Since they're typically in the 0% or 10% bracket, the withholdings are minimal anyway. The key is treating them like any other employee from a paperwork standpoint - W-4 forms, regular pay periods, proper withholdings, and W-2s at year end. It might seem like overkill for family members, but it's exactly what the IRS expects to see if they ever audit the situation.