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Date: May 12, 2011
Subject: G&G Tax Tip: Payroll Service Improperly Took Taxes on Child Hire


This is
G&G Associates Tax & Financial Consulting
e-Newsletter

Payroll Service Improperly Took Taxes on Child Hire


Imhotep (Wisdom to You) G&G Readers,

Question: Our payroll service took FICA, Medicare, and unemployment taxes on the wages I paid my 15-year-old child.

When I told them the child is exempt from payroll taxes, the service person told me that was incorrect. You said that the child wage was exempt. Who is right?



This is
G&G Associates Tax & Financial Consulting
e-Newsletter

Will display ads on my car eliminate commuting?

Imhotep (Wisdom to You) G&G Readers,

I get this question about once every two or three months:

Question: Will the advertising wrap I just put on my vehicle eliminate my commuting to the office?

You've seen these vehicles. They look like moving billboards on steroids.

If one of these advertising wrapped vehicles is parked in the grocery store parking lot, you may want to, but you can't miss it.

So the question is: If you have your vehicle wrapped to advertise your business, will the wrapping eliminate that personal mileage known as commuting?
See below for the answer:


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So who is right?
Answer: We are.

Go to page 9 of IRS Publication 15, (Circular E) Employers Tax Guide, and you will find on that page that wages paid by the parent to a child under the age of 18 are exempt from FICA and Medicare taxes.

You will also find that wages paid by a parent to a child under the age of 21 are exempt from federal unemployment taxes.

Your next step is to make a copy of page 9 and send it to the payroll service.

You have to think that your payroll service is pathetic. They should know the rule. After all, you brought it to their attention.

But the mistake you encountered is pretty common. Payroll services don't run into unusual transactions very often, so they often don't know the unusual rules. Then you get this typical response: "Never heard of that!"

Visit our website for more information or contact us today to set your appointment if you need a tax or financial one-on-one consultation.

Until the next time!

Ankh Uja Snb (Life, Strength, & Health),

Asar Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
757-251-0174 office
866-361-3872 toll free fax
www.gngassociates.net
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