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Tax Information With A Mother's Touch
Published by Eva Rosenberg, MBA, EA
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Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA |
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 » From: Texas Dear TaxMama: I have a small house cleaning service and sometimes I use family members to help out. Do they have to claim what I pay them if I claim paying them? Or what is the limit they can earn before having to claim it on their taxes? One of the family members is 15 years old and I don't know anything about the tax law for a 15 year old. Please help if you can. Thank you, Jackie  Dear Jackie, You bet. You pay them - they report it. ALL of it. There's no minimum they don't have to report - especially if you don't put them on payroll. Then, they're even faced with paying self-employment taxes (Social Security) of 15.3% on that income, even if it's as low as $400 for the year. If you're hiring family members who are as young as 15, check with your local labor department to learn the laws and rules. It's possible, that since it's family, you don't have an issue. On the other hand, you might. And it might easily be resolved by getting a work permit from the school. You should be doing payroll for all the people that work for you. (See TaxMama's article, "Contractor v. Employee, How Does It Affect Your Taxes?") Work with a good local tax pro to get your business set up properly. It will save you so much money in the long run. I don't even want to point you to do-it-yourself tools. (Although if you just wander through this site, or search it, you'll find plenty.) With the kind of business you're running, you've got so much exposure in so many different ways, you really need someone to help you. Also, please make sure that you have liability insurance. If anyone working for you does any damage to something expensive, or is accused of stealing (even if they didn't), you could lose everything you have. In fact, I'd incorporate and protect my personal assets before I or my staff set foot in anyone's home or apartment. You thought it would be easy to just start a little cleaning service, didn't you....? Sorry. I've seen what could happen when a customer decides to be unpleasant. (Not to me, to my clients.) Just remember, the hardest thing to prove is that you didn't do something that you didn't do. (i.e. that you didn't steal something - it's your word against the customer's.) Take care of yourself. Best wishes, Eva Rosenberg Your TaxMama  |
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| Library of Congress - ISSN 1532-0790 Copyright © 2000-2003 - Eva Rosenberg |
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