Are You Paying Your Kids Through Your Practice Yet?
- Aug 5
- 2 min read
Many doctors and dentists look for ways to reduce taxes while managing the high costs of running a practice and supporting a family. One IRS-compliant strategy often overlooked is paying your children for legitimate work in your practice.
Why Pay Your Children?
When you pay your children for real work:
● Your practice deducts their wages as a business expense, reducing taxable income.
● Your child may owe little to no federal income tax on those earnings, depending on their total income.
● The funds stay within your family, helping with savings or education while lowering your tax bill.
What Work Qualifies?
The IRS requires the work to be real and age-appropriate, such as:
● Filing and organizing records.
● Cleaning office areas.
● Assisting with marketing tasks (older children).
● Managing mailers or supply inventory.
Payments must be reasonable for the tasks performed and necessary for your practice.
The Importance of Clean Bookkeeping
This strategy depends on accurate, organized bookkeeping:
● Track dates, hours worked, and tasks performed by your child.
● Record wage payments clearly in your books under payroll.
● Retain documentation to support the legitimacy of the payments.
At ISTAXPro, we keep your books clean and organized, ensuring all payments are recorded properly and ready for your tax filings.
Tax Reporting Matters
Wages paid to your children must be reported correctly on your tax returns to claim the deduction while remaining compliant with IRS requirements.
At ISTAXPro, we:
● Ensure your wages and deductions are reported accurately on your tax return.
● Reconcile your books with your filings, avoiding errors or missed deductions.
● File on time, reducing your stress during ... tax season.
Why This Strategy Matters
Paying your children for legitimate work in your practice:
● Reduces your taxable income while funding family needs.
● Keeps funds within your household instead of losing them to taxes.
● Encourages financial responsibility in your children while benefiting your practice.
Ready to Use This Strategy Confidently?
If you want to implement this IRS-compliant tax-saving strategy, ISTAXPro will ensure your bookkeeping and tax returns are accurate and compliant, helping you capture eligible deductions while focusing on patient care.
Contact ISTAXPro today to keep
your records organized and your
tax filings accurate so you can
take advantage of every
allowable deduction for
your practice.
Comments