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How much can you pay your kids without them owing federal income tax?
How much can I pay my kids without them owing federal income tax? For 2026, if your child works in your business and their income is from wages, they can generally earn up to $16,100 without owing federal income tax. That’s because a dependent’s standard deduction is based on their earned income, up to the $16,100 maximum for a single filer. And you don’t necessarily have to go all the way to $16,100. Another number to consider: $7,500. That’s the 2026 IRA contribution limit. So, for example, if your goal is to pay them enough to take advantage of fully funding a Roth IRA, as long as they have at least $7,500 of legitimate earned income, they could potentially put up to $7,500 into a Roth IRA. Remember, state income taxes may still apply. And depending on how your business is structured, there may also be a way to avoid Social Security and Medicare taxes on wages paid to your child. As always, be sure to check with your financial planner or tax professional to make sure the numbers check out for your individual circumstances. #BusinessOwner #TaxPlanning #RothIRA #FamilyBusiness #FinancialPlanning
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