This Web site contains a compilation of more than a thousand consumer finance
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Reasonable compensation for a child
originally posted: 11/22/2006
reposted: 2/18/2011 This post has not
been recently reviewed or revised by the author and may be out of date.
If in doubt, please send a new question or ask for an update.
Q: What is reasonable
compensation under IRS rules for a child who is on my business payroll?
A: The compensation should not be
more than the service could be obtained in the market. You may wish to
document competitive bids for the work that your child does in order to
justify a child's earnings in the event of an IRS audit. For example,
if the child helps by stuffing envelopes for your office’s monthly
mailings, then get bids from local mass marketing forms for performing
the same service.
Summary
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