Comments on: Common 401(k) Pitfalls – Advanced Distribution Strategies http://blog.smart401k.com/2010/01/06/common-401k-pitfalls-advanced-distribution-strategies/ News, Views and Education on Retirement Investing and the Financial Markets from Smart401k Tue, 27 Dec 2011 13:01:08 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Kaitlin Nuchols http://blog.smart401k.com/2010/01/06/common-401k-pitfalls-advanced-distribution-strategies/comment-page-1/#comment-4831 Kaitlin Nuchols Wed, 17 Feb 2010 02:05:35 +0000 http://blog.smart401k.com/?p=690#comment-4831 Hire your children ? if you are self employed. According to Metwell.com you can pay your child as much as $10,700 in 2009 with $0 tax on those earnings. The standard deduction of $5,700, and an IRA contribution of $5,000 will shelter the rest. You deduct the wage you pay in your bracket, and the child pays no tax. If you're paying your own child, and you're not incorporated, you don't need to pay Social Security, Medicare or other payroll taxes. The courts have ruled that you may hire a child as young as 7 years old. If you're in the 28% bracket and subject to self-employment taxes totaling 15.3%, the wages paid to your kids yield a 43.3% tax savings not including any state or local taxes. If you pay your 7-year-old deductible wages of $10,700, you save $4,633 and have set up a nice nest egg for your child. Thanks Uncle Sam. Hire your children ? if you are self employed. According to Metwell.com you can pay your child as much as $10,700 in 2009 with $0 tax on those earnings. The standard deduction of $5,700, and an IRA contribution of $5,000 will shelter the rest. You deduct the wage you pay in your bracket, and the child pays no tax. If you’re paying your own child, and you’re not incorporated, you don’t need to pay Social Security, Medicare or other payroll taxes. The courts have ruled that you may hire a child as young as 7 years old. If you’re in the 28% bracket and subject to self-employment taxes totaling 15.3%, the wages paid to your kids yield a 43.3% tax savings not including any state or local taxes. If you pay your 7-year-old deductible wages of $10,700, you save $4,633 and have set up a nice nest egg for your child. Thanks Uncle Sam.

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