Help Wanted: Only Sons and Daughters Need Apply

            Your stock photography business has job openings for your kids: numbering and filing slides, carrying equipment, making deliveries, scanning, typing, and so on. When you hire them, they not only earn their allowance but their pay becomes a legitimate expense for you in the eyes of the IRS.

            Wages earned by your children are deductible by your stock photo business and taxed to the child (when they earn over $4300) at his or her rate. Typically he or she is in the bottom tax bracket of 15%

            Also, each year, each of your children are able to put as much as $2,000 of their wages into a Roth Individual Retirement Account. Although they get no deductions for the Roth contributions, the write-offs would be worth little or nothing anyway because their brackets are low or zero. The big benefit is that those Roth contributions will grow without being taxed, and can be withdrawn by them at any time. They can withdraw earnings free of taxes after they turn 59 1/2.

            You are eligible to take an exemption for your children, regardless of how much they receive from earnings and other sources, so long as you furnish more than half of their total support for the year. For 2001, the standard deduction is $4,550 and the dependency exemption amount is $2,900.

            As long as your children are rendering a bona fide service, and receiving a "reasonable" wage, you'll have no problem with an audit by the IRS.

            The wages you pay your children under the age of 18 are not subject to Social Security and Medicare taxes.

For Info: [Internal Revenue Code Section 3121(b)(3)(A)] http://www.irs.ustreas.go

Julian Block, a former IRS agent and tax attorney, is the author of "Julian Block's Tax Avoidance Secrets" ($29.95 p&h included, 560 pgs. Mention you are a PhotoStockNotes subscriber and receive the book for $19.95. Julian Block, 3 Washington Sq, Larchmont NY 10538-2032). For Julian's tax saving and tax planning reports, go to http://www.photosourcefolio.com/TaxReports.htm . Julian can be reached at julianblock@yahoo.com.