family employees

[TAXMAN]

TP was awarded legal custody of brothers child(age 12) in June 2015. TP has a small yard mowing business.(sch c) TP paid and deposited into childs bank account $ for helping him in this business. Does the fact that this is not his OWN child preclude the fica rules. Tp has had 100% of the care of this child since being awarded the custody. Childs residence and schools records reflectsTP  as legal guardian. TP has not legally adopted child. Only concern now is with the fica rules.

[jklcpa]

I think the rules state that it must be a parent-child relationship.

[Gail in Virginia]

Do the same definitions apply here as for EITC?  Publication 15 just refers to child.  That generally includes foster child, if the child is placed with you by a state or federal agency.  Does he plan to adopt the child?  An adopted child is always treated as your own child, and if he is in the process of adopting that would probably qualify.  I don't have a definitive answer.  I hope someone can find one for you - this is an interesting question.  And if the child qualifies for purposes of the FICA rules, I would think it would also affect unemployment.  Good luck. 

[jklcpa]

Pub 15 also says "parent" though, so that would rule out the guardian.

[jklcpa]

OK, this was bugging me so I *had* to find out for sure. It's covered in sec 3121(b )(3)(A).  For those that don't like links, this is the definition of wages subject to taxes under 3101(a)  and 3111(a), both address OASDI  :

(A) service performed by a child under the age of 18 in the employ of his father or mother;

[Max W]

What happens when an individual has all the rights, duties and responsibilities of a parent?  The American Law Institute recognizes "de facto parent", as do many states.  What makes the argument stronger is if the parent is related to the child.  The tax code does not state "biological" father or mother and there are new defintions of parent adjudicated by some courts, it might be an issue worth closer examination.

https://workfamily.sas.upenn.edu/glossary/d/de-facto-parent-definitions

http://www.brewelaw.com/?page_id=225

 

[Roberts]

I'm with Max!

I know the rules state Parent (mother / father) but I've had multiple CPAs and attorneys declare they extend this to grandchildren. Tons of website include grandchilden in their pitch for tax reduction.

[michaelmars]

unrelated, but what services did they do?  at least here in NY they are too young to do such work, no machinery can be used. Need working papers which you can get at 14 for many jobs but nothing with machinery.