Family member employee

[NotEasy]

A business have only one employee who is a family member under 18 years old. There is no FIT, FICA and MEDICARE withholding. Does the business still have to file the quarterly Form 941, annually Form 940 and issue a W-2 to the family member employee at the end of the year?

[Uncle Sam]

Family Member Employee

Yes. You're still obligated to file the payroll forms.

[Jiggers]

Family Employees

A business have only one employee who is a family member under 18 years old. There is no FIT, FICA and MEDICARE withholding. Does the business still have to file the quarterly Form 941, annually Form 940 and issue a W-2 to the family member employee at the end of the year?

Yes, you should. Also check the FIT requirement if he will owe income taxes on it at the end of the year.

[NotEasy]

Thank you everyone.

[S T]

And

Check your State requirements as well.

Sandy

[Burke]

A business have only one employee who is a family member under 18 years old. There is no FIT, FICA and MEDICARE withholding. Does the business still have to file the quarterly Form 941, annually Form 940 and issue a W-2 to the family member employee at the end of the year?

Don't believe FUTA comes into play in this instance (Form 940).

[Jiggers]

940

Don't believe FUTA comes into play in this instance (Form 940).

There won't be any FUT tax (940) on family employees. However, the return should be filed and show the wages as excludable. Otherwise you will get a notice looking for the 940 if you file a 941 and W-2's.

[Snaggletooth]

Is the Business a Corporation?

Not Easy, is this business incorporated? (Or an LLC filing as a corporation)?

The FICA/Medicare exemption is often confused for children. If the business is a corporation, they are not considered "children" of the corporation, but instead children of the shareholder. A corporation is not a person.

As such, the FICA/Medicare exemption for children under 18 is not available to a corporation. SUTA, in general, follows the same mentality, but does vary from state to state.

[RitaB]

Wow, you're good

Not Easy, is this business incorporated? (Or an LLC filing as a corporation)?

The FICA/Medicare exemption is often confused for children. If the business is a corporation, they are not considered "children" of the corporation, but instead children of the shareholder. A corporation is not a person.

As such, the FICA/Medicare exemption for children under 18 is not available to a corporation. SUTA, in general, follows the same mentality, but does vary from state to state.

I didn't even think of this, AND I JUST HAD TO EXPLAIN IT TO AN S-CORP SHAREHOLDER THREE MONTHS AGO!

[Davc]

Also check the Workmen's Comp rules in your state. Kids and pets are not exempt from WC in Oregon.

[AuditorTurnedGood]

Kids and pets are not exempt from WC in Oregon.

Pets, seriously? In my case, my pets are my kids, but this is actual law out there?

ATG

[Burke]

There won't be any FUTA tax (940) on family employees. However, the return should be filed and show the wages as excludable. Otherwise you will get a notice looking for the 940 if you file a 941 and W-2's.

You think? I have had only one client who qualified for this (back in the 90's) and I am pretty sure I did not do any 940's. In fact, I can't even find a record of any 941 except for 1999, in which his daughter turned 18 mid-year and part of her wages WERE subject to SE tax after that date. We submitted a 941 only for the wages subject to SE received after her birthday.
(I am not saying I did it correctly, but we never heard anything from the IRS about it.)

As far as currently, the only client I have now exempt from FUTA is a church. And we don't do a 940 for them.