No FICA tax (Social Security tax and Medicare tax) is due if sole proprietors or husband-wife partnerships hire their children who are under age 18.
Ditto if the children work for a parent's one-person LLC that's disregarded for tax purposes.
Also, Federal Unemployment Tax (FUTA) is not owed on their salaries until they reach age 21.
It is important that all of the formalities and record-keeping rules are followed when hiring children that would be followed when hiring any other employees.
Also, the children must actually perform services for the business and the pay should be reasonable based on the facts and circumstances.
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net