Producers benefit most from fair wages for their children
Whether it’s feeding young animals or driving a tractor, there are plenty of jobs farm kids handle daily. That’s pretty universal. Yet what varies a lot is whether those kids are paid, and how much.
The more they’re paid, the more their parents save, says Paul Neiffer, principal with CliftonLarsonAllen and a Top Producer columnist.
You read that right. Neiffer says his parents are the ones who lost out when they shorted his pay for farm jobs growing up. It turns out paying your children too little can result in a permanent loss on your taxes.
Minors of any age may be employed by their parents at any time in any occupation on a farm owned or operated by their parents, according to the U.S. Department of Labor. The law allows employees under 20 years of age to be paid $4.25 per hour during their first 90 days on any job.
“One of the key things to consider is being reasonable,” Neiffer says. “If the type of work they are doing is worth $10 to $15 an hour, pay them $10 to $15 per hour.”
Wages paid to your children are 100% deductible if your farm is a sole proprietorship or a partnership between only a husband and wife.
Anyone under 18 can receive up to $6,300 in wages yearly without paying federal income tax, according to the IRS. “There’s nothing taken from the child or parent for payroll taxes, either,” Neiffer adds.
Because wages paid to a child are considered earned income, they can contribute earnings to a Roth IRA. “If you start that early on, it can turn into a lot of money,” he says.
Be aware, though, that every state has different child labor rules. Only assign tasks permitted under the law, Neiffer warns, or you risk exposure to penalties.
10 Farm Chores Prohibited For Youth
Agricultural jobs on the list below, identified as hazardous or detrimental to health and well-being, are prohibited for people under age 16, according to the Fair Labor Standards Act and the U.S. Department of Labor.
1. Operating a tractor of more than 20 PTO hp.
2. Operating or helping operate a combine, forage harvester or hay mower.
3. Operating or helping operate a forklift, band saw or chainsaw.
4. Working in a yard, pen or stall with a bull; a boar or stud used for breeding; or a cow with a newborn calf when the umbilical cord is present.
5. Working from a ladder or scaffold at a height of more than 20 ft.
6. Riding on a tractor as a passenger or helper.
7. Working inside grain storage, an upright silo or a manure pit.
8. Handling or applying toxic agricultural chemicals.
9. Handling or using a blasting agent, including but not limited to dynamite.
10. Transporting, transferring or applying anhydrous ammonia.