[[I have a client who wants to pay his minor children(10,13) a paycheck for actual work performed in his retail store rather than pay them out of his pocket at his tax rate. Is this generally ok? ]]Not only is it OK...you might want to recommend it to ALL of your Sch C clients (it doesn't work as well with corporations and/or partnerships). The kids have to perform actual work, and the compensation must be in line with the work performed. But it is a great way to get the kids non-taxable (in many cases) income. And fund the kids IRA...either traditional or Roth...and reduce dad's SE taxes and Sch C profit all at the same time. [[It is a proprietorship by the way. Also, if the children then have earned income, could they contribute to a Roth IRA?]]Certainly. You might want to read more about this in my post on the issue in the taxes FAQ area. The post is entitled "Putting Jr. on the Payroll". I think that you'll find it interesting and right on point.TMF TaxesRoyWant to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Don't be the LAST one on your block to own this masterpiece, since it's sellin' fast. Remember: It's never to early to start planning for your 1999 taxes. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.
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