Paying my kids for helping with my rentals


W

way222

I had to do a lot of repair work on one of my rentals this
year and I had my kids help me quite a bit doing various
things like cleaning and helping me with light carpentry,
etc. I paid them $10/hour to do this work. All work was
done in Q4 of 2006. For one kids the total was about $100,
for the other about $1100.

My understanding is that I can deduct what I paid them as an
expense on the Schedule E on this property by doing the
following:

1) Getting a tax id
2) Issuing them W2's and filing W2's and W3's
(I guess I can do this electronically)
3) File a 941.

Did I leave any steps out? Can/should I file a 944 instead
of a 941?

Thanks.
 
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B

Benjamin Yazersky CPA

I had to do a lot of repair work on one of my rentals this
year and I had my kids help me quite a bit doing various
things like cleaning and helping me with light carpentry,
etc. I paid them $10/hour to do this work. All work was
done in Q4 of 2006. For one kids the total was about $100,
for the other about $1100.

My understanding is that I can deduct what I paid them as an
expense on the Schedule E on this property by doing the
following:

1) Getting a tax id
2) Issuing them W2's and filing W2's and W3's
(I guess I can do this electronically)
3) File a 941.

Did I leave any steps out? Can/should I file a 944 instead
of a 941?
don't forget your state's payroll taxes

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
 
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H

Harlan Lunsford

I had to do a lot of repair work on one of my rentals this
year and I had my kids help me quite a bit doing various
things like cleaning and helping me with light carpentry,
etc. I paid them $10/hour to do this work. All work was
done in Q4 of 2006. For one kids the total was about $100,
for the other about $1100.

My understanding is that I can deduct what I paid them as an
expense on the Schedule E on this property by doing the
following:

1) Getting a tax id
2) Issuing them W2's and filing W2's and W3's
(I guess I can do this electronically)
3) File a 941.
So far, so good.
Did I leave any steps out? Can/should I file a 944 instead
of a 941?
No. the only way you use a 944 instead of a 941, is IF IRS
so directs.

And if I might rant for a moment, That 944 is the biggest
bunch of (........ expletive deleted, use your own perverted
imagination) anyone at IRS headquarters ever thought of.

However; "have a nice day!" (grin)

ChEAr$,
Harlan
 
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W

way222

Ok, so I got a tax ID, filled out and mailed in 941's for Q2
Q3 and Q4 2006, showing no money due (kid employed in family
business means no FICA, no FUTA, and amount was so small no
taxes were due), and filled out a W2 and W3 and sent them
in.

All of these were quite late, hopefully since nothing was
owed there won't be any penalties.

Here's what puzzles me though.

Since rentals go on schedule E and not on schedule C, there
was nothing anywhere on my return indicating anything with
the new tax ID I got. Is this going to be a problem? How
does the IRS resolve what shows on the 941's and W2's with
the lack of any return using the new tax ID?

Did I mess this up?
 
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P

Phil Marti

Ok, so I got a tax ID, filled out and mailed in 941's for Q2
Q3 and Q4 2006, showing no money due (kid employed in family
business means no FICA, no FUTA, and amount was so small no
taxes were due), and filled out a W2 and W3 and sent them
in.

All of these were quite late, hopefully since nothing was
owed there won't be any penalties.

Here's what puzzles me though.

Since rentals go on schedule E and not on schedule C, there
was nothing anywhere on my return indicating anything with
the new tax ID I got. Is this going to be a problem? How
does the IRS resolve what shows on the 941's and W2's with
the lack of any return using the new tax ID?
The W-3 is matched with the 941's. Both use your EIN.
There is no automated matching between the 1040 and the 941
in such a case.
 
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M

Mike Wellman

I had to do a lot of repair work on one of my rentals this
year and I had my kids help me quite a bit doing various
things like cleaning and helping me with light carpentry,
etc. I paid them $10/hour to do this work. All work was
done in Q4 of 2006. For one kids the total was about $100,
for the other about $1100.

My understanding is that I can deduct what I paid them as an
expense on the Schedule E on this property by doing the
following:

1) Getting a tax id
2) Issuing them W2's and filing W2's and W3's
(I guess I can do this electronically)
3) File a 941.

Did I leave any steps out? =A0Can/should I file a 944 instead
of a 941?
Wages paid to your children under the age of 18 are not
subject to Social Security, Medicare or FUTA taxes.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
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Bill Brown

Mike Wellman said:
(e-mail address removed) wrote:
<<SNIP>>
Wages paid to your children under the age of 18 are not
subject to Social Security, Medicare or FUTA taxes.
Your children, OP, have to be YOUR employees for the
exclusion from FICA and Medicare to be available. If your
children are employed by your 100% owned corporation, for
example, they are subject to all those payroll taxes.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 

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