Alan Fraser Houston
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Identity Theft
Identity Theft, Money Management

21 Christmas Money Tricks You Need to Know

In today’s world, getting ready for Christmas is an undertaking. For some, it is months worth of planning. For others, they are flying by the seat of their pants at the very last moment possible. For me personally, I fall into between these two groups depending on the year. The amount of Christmas money each … Read more

Read More… 21 Christmas Money Tricks You Need to Know

Source: moneybliss.org

Identity Theft, Money

Bible Verses About Wealth

These Bible verses about wealth talk about how God has promised to provide for us, and why the desires for wealth can be so deceiving and easily become a false idol in our lives.

The post Bible Verses About Wealth appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.

Source: biblemoneymatters.com

Identity Theft

How Scanners and Screeners Can Revolutionize Your Trading

If you invest in stocks then you already know that it is a great way to put money aside where it will work for you. But if you want to take your strategy to the next level, then you need to be looking at technology to take the strain.

When you consider that the NASDAQ and NYSE have upwards of 7,000 stocks listed, you may wonder how anyone can efficiently identify good targets.

Don’t worry if you aren’t a committed full-time day trader; these apps work just as well for the part-time investor who is looking to put away a few hundred dollars into good quality companies.

The good news is that by using a scanner or screener app, you can quickly find stocks that fall into your investing plan and snap up those bargains early.

Don’t worry if you aren’t a committed full-time day trader; these apps work just as well for the part-time investor who is looking to put away a few hundred dollars into good quality companies.

Scanner and screeners—what’s the difference?

Sometimes people will blur the lines between scanners and screeners.  It is important to understand the difference because each are useful for different situations.

A stock screener is a filtering mechanism that will look at a market and filter out stocks that don’t fit your particular strategy.

For example, perhaps you only want NYSE traded stocks, in utility companies, with high trading volumes that have shown a 5% increase over the last week.

A good stock screener will give you a list of the companies that fit your criteria in seconds, providing you with targets to investigate further.

For most modern screener apps, the list of criteria you can choose is almost endless. This gives you the power to spot the type of company stocks you want to buy with pinpoint accuracy.

Stock screeners are one of the first types of apps for investors devised for the internet age. They are designed for people who might log on once a day, download a series of longer-term targets, and then do their research.

In general terms, stock screeners tend to be quite light on resources, which means that you can use them on pretty much any computer or device.

Screeners are great for investors as they give you targets to look for based on a series of attributes. However, they tend not to be used as much by day traders — for that, you need a good stock scanner.

Stock scanners may look similar to screeners but they are quite different. These apps are more useful for active day traders.

Stock scanners bring in real-time information showing stock movements based on a series of criteria that you set.

Because they are real-time, they tend to be used much more by very active day traders who need instant access to quality information.

Many traders look more at current movements in stocks rather than historical results and so they need to spot shares that suddenly have a large volume of trades or swing wildly in terms of price.

Day traders make money from volatility—this means that they need to be constantly looking for stocks that fit into their definition of a target.

Day traders make money from volatility—this means that they need to be constantly looking for stocks that fit into their definition of a target.

Because they take in huge volumes of data and process patterns, movements and fundamentals of stocks instantly, scanner programs require a large amount of computing resources. This means traders need a very capable PC or MAC.

Web-based scanners are available but can tend to be slower. When the difference between a good and bad trade is measured in milliseconds, day traders can’t afford to take a chance.

Scanners and screeners—just the starting point

It’s important to note that scanners and screeners are really only the starting point for a professional investing or trading strategy.

Screeners in particular will only identify potential targets for you to invest in based on the criteria you set. If you set the wrong criteria then you’ll get a list of poor targets—Garbage in Garbage Out (GIGO)!

Professional traders will take the results that they get from a scanner and use that as a jumping-off point to understand whether it is worth investing or not.

Depending upon the type of trader they are, they will look at the fundamentals of a company, including things like a ratio analysis and news research, or perhaps will chart the stock movement over a period of time and then make their move.

It is important to remember that an app really should be seen as one weapon in the armoury for professional traders and only by building up a rounded picture of a stock can you make successful trades.

Things to look for

If you are thinking about using a scanner or screener, then what should you look out for?

Here’s a selection of attributes that are important when looking at this type of tech.

  • Price—This goes without saying. If you only trade a low volume of stocks then a high priced scanner could wipe out your profit almost instantly!
  • Usability—This is really important if you are a full-time day trader. Burn out is a real thing and having an app that is easy to use can make life so much easier.
  • Speedy links—When time is paramount, there’s no place for lags in the connection to the markets.
  • Markets you like—Your app needs to be connected to the market you are interested in. Not all are.
  • Understandable—Some older apps require an almost developer-level understanding to produce effective criteria. Make sure you take a trial before signing up.
  • Multiple elements—Choose an app that can give you access to technical, fundamental, intraday and post-market information for your trades.

The best advice here is to make sure you take a trial (most apps offer free or low-priced trial periods) and really test all aspects of the software to make sure it does what you want, how you want it to.

Scanners and screeners can really make a difference

If you have been running your investment or day trading strategy manually until now then maybe it is time to take the leap.

Using tech to take the strain off of you will give you better access to more suitable targets faster than your peers, which will really ramp up your trading.

Source: quickanddirtytips.com

Identity Theft

How This Former Zookeeper Paid Off Over $40,000 In Debt

Hey! Today, I have a great debt payoff story to share from Steffa Mantilla. She paid off $40,000 in debt so that she could be a stay at home mom and start a business. Enjoy!

My husband CJ and I have been married for over a decade.  You’d think with all that time married would come wisdom but it wasn’t until year 10 of our marriage before we really took stock in figuring out our financial life.

How This Former Zookeeper Paid Off Over $40,000 In Debt

Like most people, we got into a routine and didn’t question what we thought was working.  We had surrounded ourselves with other couples who were living the same way we were. 

There was no impetus to change because we had created a comfortable echo chamber with a “Keeping up with the Jones’ mentality.”

Fast forward to today and we’ve paid off $100,000 in debt and are on track to pay off our mortgage within the next 3 years. 

While there’s no “easy button” on debt payoff, I hope that our story can help others see what’s possible and the steps we took to get there.  

More debt payoff stories:

  • How We Paid Off $161,000 In Student Loan Debt in 16 Months
  • How Amanda Paid Off $133,763 In Debt in 43 Months
  • How We Paid off $266,329.01 in 33 Months
  • How I Paid Off $29,000 In Debt By Living In a Van

 

Our Debts

In 2016, my husband and I were close to $200,000 in debt.  Around $165,000 was our mortgage, $12,000 in student loans, and $30,000 in consumer loans.  We were a dual income couple with no kids and lived like money was infinite.  Most of our friends had a similar lifestyle and seemed to be able to afford it.  

The problem was, we put our entire life on payments because we had the mistaken belief that we “deserved it” somehow.  Payments for already-experienced fancy vacations, new cars, and furniture ate up the majority of our paychecks.  

From the outside, we seemed like we were well off when in reality, we were one missed paycheck away from not being able to make the minimum payments on our bills.  

 

What Made Me Want To Change My Career

By the time 2016 rolled around, we had been married for 11 years and were ready to start a family.  I had also been in my zookeeping career for equally as long.

I had worked my way up from an Avian Intern all the way up through my ultimate goal of Senior Keeper for Carnivores.  While I had loved being a zookeeper all those years, I had reached the limit of upward mobility.  All higher positions were supervisory and were no longer working directly with the animals.  

When we were discussing our future family plans, it became apparent to me that my career wasn’t going to mesh well with my idea of motherhood.  Zookeepers work long hours, often starting at 6AM to get the exhibits ready by the time guests arrive.  They also work every weekend,  evening special events, and every holiday.  

I was also capped out on pay. 

Despite working a decade in this field, having advanced continuing education certifications, and the required degrees, I made merely $16 an hour (roughly $30,000/year).  The long, strenuous hours left me burnt out and wanting a change.

One day, my husband and I sat down to do our budget planning for a baby.  After looking at all of the costs, including childcare, if I continued to work in the same job, I would be making negative dollars

This, combined with rarely being able to have weekends or holidays off with my family, was a deal-breaker.  I’d essentially miss out on my child’s entire childhood if I stayed in this job.

I brought up the idea of becoming a stay at home mom and we set out to make a plan.

 

What Needed To Happen To Make This Work

In order for me to become a stay at home mom, our family budget had to be drastically altered.  Thankfully, while talking about finances was awkward in the beginning, we quickly set aside any embarrassment or feelings of guilt that we had.  

Open communication without judgement, finger pointing, or blame was the only way we were able to make a real plan that we could stick to.  While it was stressful since we were essentially broke despite both earning incomes, we instead used this to come together and strengthen our marriage instead of pull us apart.

By the end, we came to the conclusion that a few things needed to happen:

  • Pay off all our debt (except the mortgage)
  • Lower our frivolous household expenses
  • I’d need to get a job to make up the difference in our budget

 

Our Money Mindsets

As a wedding gift, we had received the book The Total Money Makeover.  Neither of us had heard of Dave Ramsey before and didn’t really have an interest in learning about him.  Thus, this book sat on our bookshelf for 10 years unopened.

It’s kind of interesting thinking back about how we had the tools for financial success right in front of our faces for literally 10 years without ever using them.  But, we weren’t mentally open to change at the time.  

I think the saying that “you can help someone who won’t help themselves” is especially true when talking about money.  Money is a personal topic that many people have hang ups about. In our case, I knew investing was good so we did that but never really had a problem with debt.  I assumed everyone had debt and all my friends confirmed that.

For CJ, he grew up in a household where you didn’t talk about money.  It was always a source of stress because there was never enough.  Then when he grew up and got his first adult job, there was a sigh of relief.  All restrictions were gone and he could spend how he wished instead of constantly being in a scarcity mindset.

Even though we came from very different money backgrounds, we both were missing solid financial knowledge.  Neither of us had been taught about building wealth or living a debt-free lifestyle.  

This was a huge paradigm shift that we each needed to overcome in order to truly get on the same page and work together.

 

How We Got On The Same Page As A Couple

I love reading so I quickly devoured The Total Money Makeover in one day.  But no matter what, I couldn’t convince CJ to read the book.  He thought of it as “work” and he’d rather read for relaxation.

So I used my training in operant conditioning to subtly leave hints and clues about.  CJ and I now joke how I “clicker trained” him into getting on board. 

During car rides together we’d listen to the Dave Ramsey Podcast. I’d talk about how neat it was hearing other’s debt-free screams and then we’d discuss what we’d do if that were us.  Could we ever achieve that?  How are these people able to do this and we can’t when we’re earning more money than them?  

The best persuasion was learning about others achieving their financial dreams.  Dreaming together and making plans for our financial future was instrumental in giving us an achievable goal.  

Now it wasn’t just some vague idea; we had concrete plans for how we wanted the next 20 years to go.  We could eliminate financial stress and truly live a life we never thought was possible.

 

Our Plan To Pay Off Debt

So back to the debt.  We had around $42,000 that needed to be paid off before I could become a stay at home mom.  We weren’t a brand new couple so we did have some savings and investments.  Everything was disjointed and not well organized though.

After looking at our current financial state, we saw that a lot of the debt could be wiped out fairly quickly with the money we had in various places.  

Here’s where we took money from:

  • Sold stock from my childhood mutual funds that my parents had set up as a teaching tool. (~ $2,000)
  • Sold company stock from CJ’s job that was bonus compensation. (~$3,000)
  • Emptied out our $15k Emergency Fund down to $1,000 ($14,000)

These were the immediate quick wins that we could do.  We now had $23,000 left in debt to tackle.  

Rearranging our budget was where we found our largest consistent monthly savings.  After tracking our spending for a few months, we saw that we were spending an insane $800 a month on eating out and for entertainment purposes.  This was on top of the $600 we already spent on groceries for two people.

While we do live in a city where things cost more, it wasn’t enough to justify hundreds of dollars every month.  We were going out for dinner or drinks with friends whenever we were invited.  We never said “no” and our bank account was weeping.  

I also started to take any overtime that was offered.  I’d either come in to work on my days off when coverage was needed or I’d volunteer to work extra evening special events.  This also made it easier to save because a lot of my free time was being used up so I couldn’t go out with friends.

After rearranging our budget and adding in overtime pay, we were able to free up around $1800/month to go directly towards debt. It took 12 months for us to pay off the remaining debt.  During this time I got pregnant and now had to figure out what to do about my soon to be eliminated income.

 

Making Up The Deficit In Our Budget

Fast forward to me having a baby and being out on maternity leave.  During this time I was still being paid since I had sick days accumulated from the past 5 years.  I was working with my boss to try and see if a part-time or few days a week position could be created.  

Ultimately, while they were willing to work with me somewhat, it still wouldn’t have been financially viable due to the cost of childcare.  

After switching gears, I started talking to other zookeepers who did pet sitting as a side job.  They mainly did weekend pet sits or before and after work drop-ins.  I picked their brains a bit and then decided to offer up my services on Rover.

The reason I chose Rover was that there was already a built-in client base.  I knew I could get clients by highlighting my experience with animals.  Who wouldn’t trust their dog with someone who worked with cheetahs and lions?  By using Rover, I didn’t have to do any outside marketing and ended up having a client wait list.

I also made it clear that I’d be bringing my baby along with me to all dog walks or cat sits so I only took on small or elderly dogs and cats.  I met all clients ahead of time to do behavioral observations and stroller testing to ensure it would be safe. 

In the end, I took on 2 mid-day dog walk clients and numerous cat sitting clients. Our budget was going to be $500 short once my maternity pay ended but with these pet sitting clients I was making $500 a month bare minimum.  And I didn’t need to worry about childcare.  

 

Paying Down The Mortgage

As I got into the hang of mom life and my child grew older, I started looking into creating my own business.  I was now a self-taught personal finance enthusiast  and Certified Financial Education Instructor (CFEI) so I started my blog Money Tamer.  I was able to write blog posts during my son’s nap time and learned as much as I could about online business.  

My blog is now monetized and the income I take from it goes directly towards our mortgage principle.  Any extra money that CJ earns also goes towards paying off our house early.  We’ve sold things we no longer want or need to consignment stores or used online marketplaces.  

Over the past three years, we’ve been able to put close to $55,000 towards paying down our home making our total debt payoff close to $100,000. 

Our next goal is to have our house paid off in an additional 3 years or so.  

 

Final Thoughts

Getting out of debt is possible even when you feel lost.  So many people grow up in households where money is taboo and many schools barely touch upon the subject.  Even if you think you’re too far gone, I’m here to tell you it’s never too late.

We had been married and spending with abandon for over 10 years before we got our act together.  The biggest factor in our success was our change in mindset.  We started seeing money as a way to build freedom into our lives rather than surrounding ourself with consumer goods.

If you’re in a couple, it’s paramount that you have meetings to dream together.  You both need to create a dream you’re both working towards so that you aren’t tempted to derail one another.  When one of you is struggling, the other is there to help keep you on course and vice versa.  

This is the route we took, and while it’s not complete yet, we’re well on our way to being able to reach our goal of financial freedom.

Author bio:  Steffa is a Certified Financial Education Instructor (CFEI) and founder of the personal finance website Money Tamer.  She is an online entrepreneur who built her business while being a stay at home mom to her toddler.  Steffa has paid off over $100,000 in debt and now teaches others how they can get their finances under control to do the same.

Are you trying to pay off your debt? What are your dreams for life after debt?

The post How This Former Zookeeper Paid Off Over $40,000 In Debt appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com

Identity Theft, Taxes

Should We Employ Our Own Kids? (and How Much to Pay Them)

My Brother Wax Mannequin, training the next generation of workforce last summer.

Way back in 2015, I had a nine year old boy. Even back then, I could see him showing some early flashes of adulthood and maturity, and it got me wondering about his future as it relates to money and freedom.

So I wrote a post called What I’m Teaching My Son About Money, which shared some ideas about how we can raise our next generation of kids to be happy masters of money rather than the stressed-out slaves that most people (even those with high incomes) are today. And now, four years later, some of my predictions and questions from that article are starting to come true, and I’m wondering what to do about it.

To me, the biggest question is this:

Where is the balance between giving your kids a helpful boost, and “helping” them so much that you distort their view of the world and create a generation of Whining Complainypants Adults?

Opinions on this subject can vary widely, and in fact even you and I might have rather different views. But hopefully we can at least agree that the whole thing sits on a spectrum, and that even that spectrum itself is slippery because every child and every upbringing is unique.

So let’s get onto the same page with an attractive and scientific-looking diagram.

Almost any parent would agree that the left side of the spectrum is a bad place for kids to be born. Because it affects not just their childhoods, but their entire lives. So we strive to provide a life that is further to the right, keeping our kids fueled with food, love, and opportunities.

But as with all human pursuits, we have a tendency to go too far and get into the “Too Easy” end of the spectrum. We may be smothering our kids with too much “help”, or perhaps compensating for being so busy with our fancypants careers that we don’t have much time to spend with them.

While this all feels like common sense, there’s also some biology behind it. Babies and young kids who experience a harsh environment during this critical part of development will tend to grow up more optimized for survival and street smarts, with lower levels of trust and a harder time blending in with a peaceful society*.

And on the more fortunate side of the divide, children raised in peace and security will optimize more for “book smarts” intelligence as well as being more trusting and less prone to violence. The entire apparatus of our brain will end up wired differently, based on the experiences we have in early childhood.

The problem for wealthy people is that the human brain is not wired to stop at “enough”, because enough has not been a big part of our shared history.

So we tend to overdo it when creating a comfortable life for our own kids, often justifying it with this exact sentence:

“We work hard, so we can give our kids some of the opportunities and the nice things that we didn’t have in our own childhood.”

It sounds noble and honorable on the surface, but be careful, because we can ratchet that same justification up far beyond any reasonable lifestyles without realizing we are just stoking our own egos or compensating for our own fears (and perhaps battling our peers/competitors in the Who’s-the-Best-Parent Competition on Facebook).

And then these kids respond by developing in a different way that can have its own downsides. Not understanding what it means to be poor. A lack of life’s most valuable skill – the skill of efficiency, optimization and reducing waste. And even a lack of life satisfaction and balance in later adulthood, because of a focus on easy consumption rather than the joy of creation.

So with such a slippery slope and those two pointy arrowheads to navigate, what’s the ideal strategy for us parents?

I don’t have all the answers, but one idea I have been interested in for years seems to have a lot of advantages: Hiring your children to work in your own small business.

Just think about it. You get to do all of these things and more:

  • help your kids earn their own money
  • teach them the value of hard work
  • have more excuses to spend time together solving problems – maybe even as they grow into adults
  • potentially cut the family’s total tax bill by transferring income from the high tax bracket of the parents, to the low (or zero) bracket of the kids.

Of course, there are also a few traps to watch out for in running a family business:

  • the job you give them might be better (or worse) than what they could get elsewhere, leading to a distorted view of what it really means to work for a living
  • if you don’t get along particularly well, tying your fates together even closer in a company will magnify any problems in your relationship
  • your kids might miss out on other, broader life experiences they could have had out there in the real world (like my own formative jobs in the gas stations and convenience stores of my small town, which are still the source of stories and laughs to this day.)

Still, the potential benefits clearly outweigh the risks to me, so the idea remains an exciting one in my mind.

Little MM and the Budding YouTube Project

I have been dabbling with this with my own son for several years – he helped me with the arduous task of mailing out over 1200 MMM T-shirts a few years ago and occasionally helps his mother in her soap production enterprises. His earnings have typically been on a per-shirt or per-soap basis

But things really took a step up this past January when he talked me into dusting off the neglected MMM YouTube Channel and actually starting to produce some shows together. Because we started with the good luck of a partially established audience and we have put some real effort into it (13 episodes over these first six months), it has taken off a little bit and we now have over 27,000 subscribers and the channel has earned about $1600 in YouTube ad revenue so far.

As a fun incentive, I offered at the beginning to pay him a flat (low) fee for editing and producing each episode, then split the income from this venture equally beyond that. So now, the little dude has made $800 on top of his base fees for the work.

If this continues, it could grow into a real income, which is quite exciting but also brings up some interesting tax questions. After all, right now he is a dependent for tax purposes, which means at least one of his parents get a tax deduction for raising him. But if he earns his own money, he might rise out of this dependence and even start owing taxes on his own. So is it worth it?

Hey, Let’s Ask my Accountant!

Outsourcing my taxes to someone younger and more enthusiastic about it than me has worked wonders.

To get better advice, I decided to run this by my own business and personal tax accountant, Chris Care who runs his own firm called Care CPA. We talked over the ideas of family businesses and employing a child in greater detail.

In summary, the results are better than I expected, which explains why people are so keen to hire their children.

Here’s my brief Q&A with him. Thanks for your help Chris!

MMM – So the first question is, what are the basic rules about employing one’s own child in a family business. My first instinct is that it sounds smart, because you are shifting income from parents in a potentially high tax bracket, to kids in a low tax bracket. So overall as a family, your tax bill falls.

But Is it a good idea? How old do they have to be? Any things to watch out for?

Chris Care: The biggest thing to watch out for is making sure the children are old enough to actually work. A lot of business owners want to pay their 1-year-old $15,000 a year for “modeling” by putting their picture on the company website. To me, this is a stretch.

You also want to make sure you’re paying them in accordance with the tasks they’re doing. If they are 12 years old and filing paperwork for you, or cleaning your office, or other administrative tasks, you probably can’t justify paying them $50 an hour. You should make sure there is a clear job description, and keep an accurate record of the number of hours worked and the tasks performed, just like any other employee does at their job

MMM –  What is the current child tax credit amount, and how would it phase out if he started making his own money? And does this scale up and down with the parents income as well?

Chris Care – Currently, the child tax credit is up to $2,000 per child, with up to $1,400 being refundable if the credit exceeds your tax amount.

In general, as long as you can claim the child as a dependent, and your income is below $400k if married filing jointly ($200k otherwise), you can claim the child tax credit no matter how much money your child makes. Above this income, the child tax credit phases out, but it is still not related to the child’s own income.

MMM –  Oh wow, I didn’t realize that. And at what level would he need to start incurring his own income taxes? And as an employer, would I be on the hook for stuff like quarterly tax payments, unemployment insurance, worker compensation, and so on? Could he be more like a contractor and avoid these complexities?

Chris Care – It’s unlikely you could classify your own son as a contractor. The IRS used to have a 20-factor test, but recently they have been narrowing and cracking down on this issue – more details here: Behavior, Financial, and Type of Relationship

Aside from that, you’d have to handle things in the standard employee way:

  •  tax withholding from every paycheck, submitted to the government as part of a standard payroll process. (MMM Note – even I have to do this as an employee of my own LLC, I use a provider called ADP and am evaluating a newer one called Gusto).
  • quarterly payroll taxes for social security and medicare
  • State unemployment insurance if applicable in your state
  • FUTA (A form of Federal Unemployment Tax)

Just like any other taxpayer, the child will need to file a federal tax return if their earned income is above the standard deduction ($12,000 for 2018, and $12,200 for 2019). Note that state filing thresholds are often much lower than federal thresholds – check with your own accountant!

MMM –  If a kid is living at home with no expenses, he might be wise to put as much of this into retirement accounts and otherwise defer taxes. If my company offered an employee 401k plan, could he put away the full $19,000 per year, or is there an even better option? Maybe his own tax-deferred college savings plan?

Chris Care – As with any other employee, the child can participate in the company’s retirement plan, as long as the plan is written to allow minors to participate. The contribution limits will depend on the type of retirement plan. In your example of a 401k, the child could defer the full employee amount ($19,000 in 2019) as long as wages were at least that amount. He would also get the employer match if your company established one.

College savings plans are an option, though whether or not he can open his own would be a question for your specific provider. Financial service firms tend to get a little hesitant opening accounts for minors. You could always open one, and he could contribute to it.

MMM Summary: Wow, this is much better than I had even hoped. In rough terms terms, it sounds like if I can pay my son $30k from my company’s income, I might save about $10k in marginal income taxes, while his resulting tax bill would be quite minimal.

Thus, it makes sense for me to start paying him as a real employee, rather than just paying all the taxes at my own marginal rate and keeping it in our own family spreadsheet, as I do now. 

Chris Care – Yes, there are some good opportunities for tax optimization by hiring kids.

In general, if you can justifiably pay your child a wage from the family business, it is an excellent way to lower the family’s tax burden, and give them a massive boost in retirement savings (since 401k contributions add up way faster than IRA contributions).

Also, by owning the business, you can administer your own 401k plan – which means you don’t have to wonder if your employer’s plan will allow for a mega backdoor Roth, since you can design it that way! Just keep in mind, that 401k plan is for all employees, so any attributes you establish for family members would also be there for non-family members that you may hire.

Another optimization: if you were a sole proprietorship, or a partnership where both partners are parents of the child being employed, the child’s wages would not even be subject to SS/Medicare taxes.

This means you could pay them the $12,000 standard deduction plus $19,000 401k deferral, with zero income tax, zero SS/Medicare taxes, and zero Federal Unemployment tax. They may still be subject to state income tax and state unemployment tax, but those would be relatively minor.

You can essentially shove $31k into a zero tax situation, from potentially a ~35% situation.
This means it may be worth operating the youtube channel as a separate company, and employing your son as a real employee…

MMM – hmmm, lots to consider! For now, YouTube is still only a few hundred bucks per month so we are not there yet. But it sounds like little MM’s future is bright, as long as he remains motivated to work hard and be creative and keep producing.

Which is a good general philosophy for any of us: keep some good hard work as part of every day, whether you’re ten or one hundred years old. Doing good work and producing good things tends to lead to a good life.


A Few More Thoughts and Disclaimers from Mr. Care:

  • In all of these answers, I have assumed the child is a true employee, where he receives a regular paycheck and a W-2 at the end of the year, and the company is a C Corp or S Corp.
  • As with all tax planning, tax credits, and personal situations, there are exceptions and limitations. So we’ve made some broad assumptions to answer these questions. For me to post an exhaustive list of these would take an entire blog post of its own. Always check with your tax professional, or make sure you understand the IRS guidance.
  • generational wealth / inequality / dynasties / buffett
  • effective auism

A Final Thought from MMM:

If all this sounds like wishful thinking to you because you don’t own your own business yet, I strongly encourage to start one! For the great majority of early retirees, having a small entrepreneurial pursuit is both a reassuring security blanket and a fascinating and fun way to explore life after the cubicles and commuting stage is over. The Joy Of Self Employment.


* This one of many interesting and sometimes untintuitive insights I got into Human nature when reading the rather excellent book Sapiens.

 

Source: mrmoneymustache.com