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Paying my kids for helping with my rentals

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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Reply to
way222
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don't forget your state's payroll taxes

___________________________________

-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA

So far, so good.

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

Reply to
Harlan Lunsford

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?

Reply to
way222

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.

-- Phil Marti Clarksburg, MD

Reply to
Phil Marti

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.

Reply to
Bill Brown

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