<p>Maybe he can work for Busdriver’s startup? ;)</p>
<p>CF, since you are pretty well educated and smart, i know you have looked into the job issue. What is out there in your community for people like your son?</p>
<p>Any agencies or non profits that can find your son some work? Maybe not 40 hours, but some hours?</p>
<p>Not all of 15.3% needs to be added to FPL. If employer pays 7.65%, only FPL is needed to be shown on the first page.</p>
<p>The 15.3% doesn’t reduce net income in any case. If you are paid $20,000 and take home after FICA is only $18,470, your taxable net is still $20K. The taxpayer reports the amount on line 1 of the W2 - see: <a href=“http://www.irs.gov/pub/irs-pdf/fw2.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/fw2.pdf</a></p>
<p>The issue of the cost comes up as a factor of the cost-benefit analysis involved in the parents paying their child vs. simply supporting the child and paying the insurance premiums directly. The transfer of assets to the child in the form of wages rather than a gift has the added cost of the 7.65% employer share of taxes, plus cuts the amount of money the child receives by 7.65%. So that’s a cost to be factored in. </p>
<p>In other words, for the parents to pay the kid $12,000 in wages, the parents will also have to pay an additional $918 in federal taxes. That’s easily 3-4 months of full cost insurance premiums for a 27-year-old right there.</p>
<p>So, hypothetically, you pay him 12k, plus 918 in additionals, and he gets maybe a $900 annual premium. Forget max OOP- he may never reach it; it’s too uncertain for a base comparison. So the fast take on the cost to parents is $13820.</p>
<p>Or you pay $4000 annual premiums, in the GA example. If he chooses the same plan direct from the insurer or through the exchange, in theory, his costs for doc visits and services would be par. </p>
<p>Of course, though depending on the state, there could be some cost-sharing by going thru the exchange- but I don’t think we know the state, nor his age, nor his health, except that there are Rx. </p>
<p>I’m thinking my vote goes to some sort of employment- but for other good reasons, not to make healthcare affordable.</p>
<p>If the family has a business this makes sense, of course. However, if you are paying a near 30-year old a salary to do household chores I’m not sure that’s the best way to get him launched. It may make economic sense but I would prefer to find a friend or neighbor with a small business to hire him, unless the plan is to keep him on the payroll forever.</p>
<p>Calmom, I suspect my Aspie son will have his own startup soon enough, hopefully funded by Venture capital, not us. Much better to use someone else’s money, not ours!</p>
<p>Agree with lf about having employment, more for the sake of other reasons, not healthcare.</p>
<p>I think it’s a big picture thing, and I assume that most parents would be looking at the big picture. The problem is not just insurance: it is how to help an intelligent and possibly quite brilliant or talented adult child develop the capacity to function independently, given that the parents cannot possibly hope to live forever. It may not be reasonable to expect the 27 year old to have self-sustaining employment, but the path can be laid so that the adult Aspie may be earning a decent income at age 35 or 40. </p>
<p>But in that context, then it certainly is reasonable to account for and factor in possible financial benefits, such as the health care subsidies or earned income credits – as well as long-term benefits to the kid to be paying into the social security & Medicare systems.</p>
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<p>calmom, I get the feeling that’s not the only law they forgot to teach you. Here’s something I found googling.</p>
<p>[Why</a> It’s Tax Smart to Hire Your Children | Nolo.com](<a href=“http://www.nolo.com/legal-encyclopedia/why-its-tax-smart-hire-your-children.html]Why”>Hiring Your Child Can Lead to Significant Tax Savings | Nolo)</p>
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<p>Further down,</p>
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<p>Can you get an EIN for mowing your own lawn?</p>
<p>Here’s some more with specific examples,</p>
<p>[Profit</a> From Paying Your Kids–Special Tax Tips for Homebased Entrepreneurs for the Current Tax Year](<a href=“http://www.barbarabrabec.com/HOMEBIZarticles/JBlock-payingKids-taxes-currentYearupdate.htm]Profit”>http://www.barbarabrabec.com/HOMEBIZarticles/JBlock-payingKids-taxes-currentYearupdate.htm)</p>
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<p>From IRS documents,</p>
<p>[Family</a> Help](<a href=“http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Family-Help]Family”>http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Family-Help)</p>
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<p>Capital is mine.</p>
<p>This one from CA CPA,</p>
<p><a href=“http://www.calcpa.org/Content/nr/exeres/fa765327-f603-4a8e-8846-cff0fbe26ebbframeless.aspx[/url]”>http://www.calcpa.org/Content/nr/exeres/fa765327-f603-4a8e-8846-cff0fbe26ebbframeless.aspx</a></p>
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<p>Again, capital is mine.</p>
<p>This one spells it out,</p>
<p>[Hire</a> Children - Hiring Children](<a href=“http://biztaxlaw.about.com/od/employmentlaws/f/hiringchildren.htm]Hire”>Children as Employees - Hiring Children)</p>
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<p>This is all about hiring someone for a business though. The person paying will not have a business to be audited in this discussion.</p>
<p>OTOH, the issues raised seem to be primarily about minor children. If the person in question has completed high school, there is almost nothing he is not supposed to be able to do.</p>
<p>Re post #7220: I think there have been at least a dozen posts thus far about the fact that the CF-friend parents are NOT self-employed or running a business. </p>
<p>The business advice article that you site has to do with DEDUCTABLE expenses. That is totally irrelevant to the issue of a private person hiring someone else to provide a personal service. </p>
<p>Secondly, you cited an article offering an opinion/ advice – not law – and the actual advice given had nothing whatsoever to do with the issue of hiring a relative – it pertains to whether the service benefits the BUSINESS for which the payment to the child is being charged. It is very clearly written that way.</p>
<p>As to the EIN question, I POSTED that the parents would need to get an Employer ID number in my initial response to CF, it seems like a thousand posts before. You do NOT need to have a business or be self-employed to get an employer ID number. You just have to employ someone. That person could be a housekeeper, nanny, personal assistant, chauffeur, cook, whatever. </p>
<p>It’s really very simple:</p>
<p>If you run a business, then you can only deduct business related expenses. You can charge the cost of your secretary to the business, but you can’t charge the cost of your nanny.</p>
<p>Individuals can and do hire people to provide personal services all the time. They pay their employees and pay payroll deductions. They just can’t write that off as a business expense. </p>
<p>So I guess I can conclude from your post that that the thing you were trying to do way back when you were “researching” the topic was looking for a way to transfer money to your daughter and write if off as a business expense? </p>
<p>As to your second quote, what part of the sentence: “The clincher was his failure … to withhold taxes on the payment” do you not understand? Haven’t I posted about a zillion times now that the parents will need to make the appropriate payroll deductions?</p>
<p>Cutting your own grass is not a business. You can’t hire your child to cut your own grass and call it business to get an EIN. Dear IRS, I am opening a business of cutting my own grass and applying for an EIN for the said business?</p>
<p>The court rejected the payment to a daughter by the doctor father. She answered the phone from patients. Because answering the phone is what kids do nomally anyway around the house. </p>
<p>IRS quote, One of the advantages of OPERATING YOUR OWN BUSINESS is hiring family members. To me, that implies you don’t have the advantage of hiring family members unless you operate your own business. But hold your breath. I am sure further googling will turn up the exact phrase.</p>
<p>The original comment where we asked for a cite: * I believe the relative has to be involved in income producing activities. * I asked for clarification of the circumstances. You could have said, when the family owns a business.</p>
<p>Now it’s minimized to “cutting your own grass.” C’mon.</p>
<p>All these pages of this and I don’t see where anyone brought it up–Payroll is a PAIN. Having 1 employee is as much as pain as having 49. Payroll requires regular returns to the IRS, to the state, and for unemployment. It requires calculating and submitting withholding. One has to either buy software or do it manually. Either way, if the person preparing doesn’t understand the laws it often goes awry. Then come the notices and the bills.</p>
<p>There were posts to the effect the IRS never audits for declaring too much income. I disagree. They do just that regarding EIC. I suspect the same thing may happen if too many people try this game for an insurance subsidy.</p>
<p>I have my own business and hired my daughter. She is paid on commission so she is only paid if she not only works but is successful. The payroll is a pain. I use an accountant because I seem to be incapable of understanding it.</p>
<p>I’m not sure what the hang-up is, Iglooo. If I want to hire a gardner, a chauffeur, or a maid, I could do that. Doesn’t matter who it is, so long as they’re a citizen or legal resident of the U.S. If I want to hire my brother to be my gardner and my sister to be my chauffeur, I can do that. And if I want to hire my adult child for any of those jobs, I can do that, too.</p>
<p>Every one of the documents you cite refers to a very different situation–where the operator of a family business wants to hire a family member, e.g., a child, as an employee of the business. That raises red flags with the IRS, because in that situation it’s tempting to cheat. Because an employee’s wages are a tax-deductible business expense, hiring a family member as a business employee can be a way to artificially inflate deductible business expenses (and artificially deflate taxable business profits) while in fact keeping that money in the family via the employee’s wages. That’s the reason for all the IRS warnings that it must be a bona fide employee doing real work related to the business’ making money, etc.</p>
<p>But the situation in which I hire a personal gardner or chaufeeur is very different. In those cases, my employee’s salary and taxes are not a business expense, and are not tax-deductible; they’re just my personal consumption expenses. The IRS doesn’t care how I spend that money because they’re going to tax me on my personal income, which will be the same whether I spend part of it on a gardner or chauffeur, or not.</p>
<p>You’ve just been persistently barking up the wrong tree.</p>
<p>I may be mistaken as to the requirement of the employer ID number – I think that technically a person who is paying for personal services can also opt to use their own SS# for reporting. The problem is that number is what is printed on the W2 or 1099 that you send to the employee. If the only person you are hiring is your own child, then perhaps it doesn’t matter – but if you were paying wages to a domestic employee (housekeeper, gardener, etc.) – then I think common sense would dictate that you apply for the EIN – especially if you expect to have multiple employees over time. (That might happen if were hiring a nanny only during the summer – you might end up with a different nanny each year.) </p>
<p>Anyone can get an EIN. See the reference to “household employer” at [How</a> to Apply for an EIN](<a href=“http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN]How”>How to Apply for an EIN | Internal Revenue Service)</p>