Skip to main content
No. of Recommendations: 1
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).

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.