A child can be employed to: (1) help move (moving expense), (2) help keep track of investments, (3) help with home office work, or (4) perform household duties.

Specific Details

The parents shifted $5,000 of income to their child employing their child to: (1) help move (moving expense), (2) help keep track of investments, (3) help with home office work, or (4) perform household duties. Since the parents income was taxed at the 30% tax bracket, the income reduction may decrease their income taxes by $1,500 ($5,000 x 30%). Since the childs taxable income was taxed at the 0% tax bracket, there may be no tax on the income. Therefore, because of the income shifting, the total family tax savings may be $1,500.