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I'm wondering if the kid is the "manager" of the property - and he's paid a wage, let's say $19,000 per year. It seems lawful that he can put 100% of that in a 401K so he doesn't have to count it as income.

With "manager" in quotes, that always seems like a tax dodge to me. But if he's really the manager, his salary probably shouldn't be more than 10% of the rents collected, since that's a typical property manager compensation. So to pay him $19k, the property would have to rent for $190k/year, or $15,833 a month. Seems like he'd need to manage a full apartment complex for that level of income.

I would also point out that, at a minimum, SS and Medicare taxes would need to be deducted and could not be contributed to the 401(k).

AJ
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