Can I Deduct My Children's Wages if They Work for My Business?

Yes — if your child performs legitimate work for your business, their wages are deductible as an ordinary business expense, just like any other employee. Children under 18 employed by a parent's sole proprietorship or partnership (owned entirely by the parents) are exempt from Social Security and Medicare taxes. The child's wages are taxed at their lower income tax rate — and with the standard deduction, a child can earn up to $14,600 (2024) with zero federal income tax. The work must be real, age-appropriate, and paid at a fair market rate — keep records and pay by check. This strategy shifts income from a high-bracket parent to a low- or zero-bracket child, reducing the family's overall tax bill.