Last updated: January 2026
The complete paperwork checklist for hiring your child in your business: forms, records, and filing requirements.
Hiring your child comes with real tax benefits, but only if you treat it like real employment. That means paperwork.
The good news: it's not complicated. Here's exactly what you need to do, step by step.
Before You Pay: Setup Checklist
Complete these before your child starts working (or now, if they've already started).
☐ Get an EIN (if you don't have one)
You need an Employer Identification Number to file payroll taxes and issue W-2s. If you're a sole proprietor or LLC owner who's never had employees, you might not have one yet.
How: Apply free at IRS.gov/EIN. Takes about 5 minutes. You'll get your EIN immediately.
☐ Form W-4 (Employee's Withholding Certificate)
Your child fills this out to tell you how much federal income tax to withhold from their paychecks.
For most kids: If they'll earn less than the standard deduction ($16,100 in 2026), they can claim exempt from withholding. Write "Exempt" on Line 4(c).
Keep: The signed W-4 in your records. Don't send it to the IRS. Just keep it on file.
☐ Form I-9 (Employment Eligibility Verification)
Yes, even for your own children. This proves they're authorized to work in the United States.
- Section 1: Your child completes (you can help younger kids)
- Section 2: You complete by examining documents
Acceptable documents for kids:
- U.S. passport (List A, only need this one), OR
- Birth certificate + Social Security card (List B + List C)
Keep: The completed I-9 for 3 years after hire date OR 1 year after employment ends, whichever is later. Don't send to USCIS unless requested.
☐ State Forms
Most states have their own withholding form (like California's DE 4). Check your state's requirements.
Some states also require new hire reporting. Look up "[Your State] new hire reporting" to find the form and deadline (usually within 20 days of hire).
Ongoing Records to Keep
Every pay period, you need to track and keep these records. For more details, see our guide on what records to keep for the IRS.
☐ Time Records
This is the most important documentation. Keep detailed records of:
- Date worked
- Start and end times
- Tasks performed
- Total hours
Format: Can be a spreadsheet, app, paper timesheet, or software like Kids Payroll. Just be consistent.
Tip: Add brief task notes. "Filing - 2 hours" is better than just "2 hours." Need ideas? See our list of 50+ legitimate tasks by age.
☐ Payment Records
Never pay cash. Always use a traceable method:
- Direct deposit (keep bank records)
- Check (keep copies or images)
- Payment app like Zelle (keep transaction records)
What to keep:
- Pay stubs (create them even if simple)
- Bank statements showing transfers
- Copies of checks
☐ Work Samples
Physical evidence that work actually happened:
- Photos of your child working
- Screenshots of completed tasks
- Saved files they created
- Emails or messages about their work
This isn't technically required, but it's powerful documentation if you're ever questioned.
Quarterly Filing (If Required)
If you withhold any federal income tax, you'll need to file quarterly.
Form 941 (Employer's Quarterly Federal Tax Return)
Who files: Most employers who withhold income tax or owe Social Security/Medicare taxes
When: Due by the end of the month following each quarter:
- Q1 (Jan-Mar): Due April 30
- Q2 (Apr-Jun): Due July 31
- Q3 (Jul-Sep): Due October 31
- Q4 (Oct-Dec): Due January 31
If your child is under 18 and you're a sole prop: You likely owe no FICA taxes, so your 941 may show minimal or zero tax due. You might qualify to file Form 944 (annual) instead of quarterly 941s.
Form 940 (FUTA)
Federal Unemployment Tax. Due January 31 for the prior year.
Note: Wages paid to your child under 21 are exempt from FUTA if you're a sole proprietor or partnership with only parent partners.
State Payroll Taxes
Requirements vary by state. Common forms include:
- State unemployment (usually quarterly)
- State withholding (quarterly or monthly)
- State disability insurance (some states)
Year-End Filing
☐ Form W-2 (Wage and Tax Statement)
You must issue a W-2 to your child by January 31 for the prior year.
Copies:
- Copy A → Social Security Administration (file electronically or by mail)
- Copy B → Your child (for their federal tax return)
- Copy C → Your child (for their records)
- Copy D → You (employer copy)
- Copy 1 → State tax department (if required)
- Copy 2 → Your child (for state tax return)
How to file: You can use the SSA's free Business Services Online, payroll software, or work with your CPA.
☐ Form W-3 (Transmittal of Wage and Tax Statements)
This is the summary form that goes with your W-2(s) to the SSA. Due January 31.
☐ Your Child's Tax Return
If your child earned more than the standard deduction, they'll need to file a tax return (Form 1040).
Even if they earned less, consider filing anyway if you withheld any taxes. They'll get a refund. And once they have earned income, they can contribute to a Roth IRA.
The Complete Annual Timeline
| When | What |
|---|---|
| Before work starts | W-4, I-9, state forms, new hire reporting |
| Each pay period | Time records, payment records |
| Quarterly | Form 941 (or 944 annually), state returns |
| January 31 | W-2 to employee, W-2/W-3 to SSA, Form 940 |
| April 15 | Child's tax return (if required) |
Common Mistakes to Avoid
- Paying cash with no records - This makes the wages nearly impossible to prove. Always use traceable payments.
- Skipping the I-9 - It feels silly to verify your own child's work eligibility, but it's required.
- No time tracking - "We paid them $10,000 for helping out" won't survive an audit. Specific tasks and hours matter.
- Forgetting the W-2 - Even if your child owes no taxes, you still must issue a W-2.
- Not keeping records long enough - Keep employment records for at least 4 years after the tax is due or paid, whichever is later.
What Kids Payroll Handles
If this feels like a lot, that's because general payroll is a lot. Kids Payroll simplifies it for the family business use case:
- ✓ Time tracking with task documentation
- ✓ Payment records
- ✓ Compliance reminders
- ✓ Reasonable wage guidance
Focus on the work. We'll handle the paperwork. See how we compare to traditional payroll software.
Use our Tax Savings Calculator to see how much you could save by paying your kids through your business.