In an April 10, 2000 article by TMF AnnC concering Roth IRA's for kids, she stated that children who work for their parents' business are exempt from self employment tax. I looked thru Publication 4: Students guide to Federal Income Tax and Publication 533 on Self Employment Tax and could not find a reference. Does anyone know is this can be substantiated? Thanks for any help anyone may provide. The following is excerpted from Pub 15, Circular E, Employer's Tax Guide, pg. 7:Child employed by parents. Payments for the servicesof a child under age 18 who works for his or herparent in a trade or business are not subject to socialsecurity and Medicare taxes if the trade or business isa sole proprietorship or a partnership in which eachpartner is a parent of the child. If these services are forwork other than in a trade or business, such as domesticwork in the parent's private home, they are notsubject to social security and Medicare taxes until thechild reaches age 21. However, see Covered servicesof a child or spouse below. Payments for the servicesof a child under age 21 who works for his or her parentwhether or not in a trade or business are not subject toFederal unemployment (FUTA) tax. Although not subjectto FUTA tax, the wages of a child may be subjectto income tax withholding.<snip>Covered services of a child or spouse. The wagesfor the services of a child or spouse are subject to incometax withholding as well as social security, Medicare,and FUTA taxes if he or she works for:1) A corporation, even if it is controlled by the child'sparent or the individual's spouse,2) A partnership, even if the child's parent is a partner,unless each partner is a parent of the child,3) A partnership, even if the individual's spouse is apartner, or4) An estate, even if it is the estate of a deceasedparent.<end excerpt>Hope this helps.Ira
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