NASE Blogs

Paying My Child

Nov 10, 2009

Q: I own a bookkeeping business and pay my 16-year-old daughter to help around my office after school. Are the wages I pay her subject to FICA and Medicare taxes?

A: The answer depends on how your business is legally structured.

If your company is a corporation, then your daughter’s wages are subject to those taxes, even if you, as the child’s parent, own the corporation.

If your company is a sole proprietorship or a partnership in which only the parents are partners, then the wages you pay your daughter are not subject to FICA or Medicare.