Transfer W2 income to kids for Rothing

[kellyandkids]

What is the name of your state (only U.S. law)? MN

I returned to a cleaning job I held previously as a 1099 employee and had my kids help. They issued to me (and the immediate predecessor) a W2. Seems I am trapped in W2 land as they supply the cleaning products, etc. Seems I can’t be a statutory employee either. But I need the “regular” earned income on a tax form somewhere so my kids can Roth this money. I am very clear on how to Roth for juveniles; that is not the question.

What I need is to get the income on my W2 transferred to them somehow. Must I start a “business” where I earn nothing but pay them? I still get taxed for the whole thing that way. Can I get the W2 reissued so the 18 yr old and the 15 yr old get their own W2s? What about the 10 yr old?? He only received a reasonable $3.50/hr. I didn’t realize the W2 would screw up my plan. The accountant has been stalling talking to me. He probably knows less than I do about taxes.What is the name of your state (only U.S. law)?

 

[tranquility]

I didn’t realize the W2 would screw up my plan. The accountant has been stalling talking to me. He probably knows less than I do about taxes.

Or, perhaps, doesn't want to educate an insistent client about tax fraud.

 

[12345672]

Or, perhaps, doesn't want to educate an insistent client about tax fraud.

Or child labor issues either.

Don't expect any help from your accountant or employer in your scheme. Does your employer know you have employed/subcontracted others (including two children) to do your duties? Beyond the tax issues, there is also liability, child labor, etc. issues for you and your employer.

 

[LdiJ]

Or child labor issues either.

Don't expect any help from your accountant or employer in your scheme. Does your employer know you have employed/subcontracted others (including two children) to do your duties? Beyond the tax issues, there is also liability, child labor, etc. issues for you and your employer.

It is ok for a self employed parent to employ their children in their business. That is totally legal and does not violate any child labor laws.

Apparently this parent thought that he/she was self employed. However, he/she was not. Therefore this parent screwed up and did put his/her employer at risk.

So I do agree that at this point that trying to change anything would be tax fraud.

 

[kellyandkids]

Yikes - enough about fraud here

The issue was I though I could transfer the income just like I did as a self-employed 1099 biz owner. Honestly, the kids are old enough to clean their own church as well as their bedrooms and bathrooms. At 18, 15 and 10 they are hardly abused and the money is theirs.

My earnings are donated back. Ya, I'm a real schemer. You guys need to get a life!

I asked the church to issue the kids their own W2s and got accused of fraud (via email) there also. (Another ignoramous enters the discussion.) I wouldn't be asking for advice if I wanted to commit fraud. I would have just demanded a 1099 and done as I pleased.

I can still pay them but at 28% federal alone that's quite a tax bite.

 

[12345672]

If the church (which should be well aware of your situation) suggests that what you want to do isn't legal, and several people that only know a very limited amount of information of the details of your situation also suggest that what you want to do may not be legal, it may be a good idea to double check and make sure everything you are doing and trying to do are legal. From your description in your initial post, it looks like your W2 plan was to pay back your earnings (at least on paper, then have the taxes already paid returned to your employer?) then have your children retroactively hired and paid and have W2's issued to them. Having the children retroactively hired and paid and issued W2's looks like it would open a whole can of worms, tax wise an child labor wise. If your children were employed and issued W2's, the church would be responsible for the child labor laws (age restrictions on equipment, record keeping, minimum employee ages, schedule restrictions, etc.). If you were issued a W2, there should already be taxes besides income taxes paid.

My mentioning child labor laws is not a suggestion at all of child abuse, but rather the complications it can bring. Tax fraud was mentioned because that is what it looks like it may be. You don't want to do anything that the IRS may see as illegal. If your children will be employees, their work will need to abide by the labor laws.

MN child labor:
http://www.doli.state.mn.us/childlbr.html
MN child labor law:
https://www.revisor.leg.state.mn.us/statutes/?id=181A

 

[tranquility]

Hmm..everyone who knows anything thinks you're playing a fast one. You want to transfer your income into theirs. How about this? You pretend you were a business, create a schedule C for the imaginary business and then issue a 1099 or W-2 for the work the kids did for the "business". (Be sure to comply with employment rules.)Then, they'd have earned income to contribute to a Roth.

Of course, you will pay penalties and interest if you are audited. But, don't worry, the intent portion which creates fraud is very difficult to prove so don't worry about it. (Unless they happen to read this thread.)