Savings vary widely based on income, business type, number of children, and applicable rules. Some families save thousands; others see more modest benefits. Our goal is not to promise a number, but to design the most defensible strategy for your situation.
Yes – when done correctly. Hiring your children has long been permitted, but wages, roles, and labor rules must be handled properly. That’s what we help you get right.
Tools and AI can generate numbers, but they can’t weigh conflicting rules, sign a CPA opinion letter, or stand behind a strategy. Small details often change the outcome.
No. Many clients use PaprikaTax alongside their CPA. We focus specifically on hiring your kids and maximizing the related tax savings.
That’s common. Every submission is reviewed by a tax advisor, and live support is available if you want deeper guidance.
In some cases, a compliant approach may not reduce total tax — or may even increase it. Our role is to help you understand the tradeoffs and identify additional tax strategies that, when implemented alongside dependent compensation, often lead to meaningful savings.
Savings vary widely based on income, business type, number of children, and applicable rules. Some families save thousands; others see more modest benefits. Our goal is not to promise a number, but to design the most defensible strategy for your situation.
Treat it like any other hire: real work, market pay, clean records.
Do this:
How PaprikaTax helps:
We provide a defensible wage range, & job description & timesheet templates (in our Blog), and a payroll checklist (also in our Blog) so your setup is consistent, documented, and audit-ready.
Treat it like any other hire: real work, market pay, clean records.
Do this:
How PaprikaTax helps:
We provide a defensible wage range, & job description & timesheet templates (in our Blog), and a payroll checklist (also in our Blog) so your setup is consistent, documented, and audit-ready.
Yes—if they do real work at a reasonable wage and you run actual payroll. The tax treatment depends on your business type:
Tax treatment by entity type
What you must do (regardless of entity)
Note: State rules vary. This is general federal guidance; confirm specifics for your situation.
Yes—almost always. If your child works in your business and you direct what they do, they’re an employee, and you should run payroll and issue a Form W-2 at year-end.
Special family-employee perks (sole prop or single-member LLC):
When would a 1099 ever apply? (rare)
Only if your child is a bona fide independent contractor, meaning they:
If—and only if—those facts are truly met, you would issue Form 1099-NEC (for $600+ in a year) by Jan 31. Note: they’d then owe self-employment tax, and you’d lose the family-employee FICA/FUTA relief.
Bottom line: Don’t use a 1099 to “avoid payroll.” Misclassification risks taxes, penalties, and interest. Running proper payroll with a W-2 is usually the right—and safest—path.
Savings vary widely based on income, business type, number of children, and applicable rules. Some families save thousands; others see more modest benefits. Our goal is not to promise a number, but to design the most defensible strategy for your situation.
There is no IRS or Department of Labor rule requiring a child to have their own bank account.
Employers can issue a paycheck to the child, and the parent can deposit it wherever they choose.
That said, best practice is to either: Pay the child via direct deposit into an account with the child’s name on it (individual or joint with a parent), or
Issue a paper check payable to the child, which the parent can endorse for deposit.
There is no IRS or Department of Labor rule requiring a child to have their own bank account.
Employers can issue a paycheck to the child, and the parent can deposit it wherever they choose.
That said, best practice is to either: Pay the child via direct deposit into an account with the child’s name on it (individual or joint with a parent), or
Issue a paper check payable to the child, which the parent can endorse for deposit.
Maybe. Many states exempt a parent’s sole proprietorship employing their own child, but rules vary by state and entity type.
You may need coverage if:
Why consider coverage even if exempt?
Without WC, an injury can still create out-of-pocket liability; WC provides medical/wage benefits and employer liability protection. A broker can quote a low-minimum “voluntary” policy.
What to do:
How PaprikaTax helps: We provide a state checklist, flag entity-based triggers, and prep a broker talk-track so you can decide quickly.
Yes. You can save your progress at any time and return whenever it’s convenient. Feel free to start now and explore the intake at your own pace.
Yes. You can generate a secure link to share your in-progress intake with a spouse, tax advisor, or other trusted collaborator so you can complete it together.
Yes. You can pause at any point and schedule live consulting with Paprika. If you’ve already made a payment, it will be credited toward the standard live consulting fee—so you won’t pay twice.
