Ep 268: The Best Hire You’ll Ever Make Lives Under Your Roof.

The IRS actually built a legal way for business owners to pay their kids, cut their tax bill, and start building generational wealth — all at the same time. Most business owners have no idea it exists. And the ones who do usually aren’t doing it right.

In this episode, David breaks down the Hire Your Kids strategy from top to bottom — including the part most people skip — and adds two more powerful moves to set your kids up for financial success long before they need it.

What You’ll Learn in This Episode

• How to legally hire your minor children in your business and deduct their wages
• Why sole proprietors and single-member LLCs get an extra tax break most people don’t know about
• What counts as legitimate work (and what the IRS will reject)
• Why teaching your kids to manage money matters just as much as saving it
• How a Roth IRA opened at age 15 can grow to over $2.4 million tax-free by retirement
• The authorized user strategy for building your kid’s credit before they ever need it — and the real risk you have to know about
• How David’s family bought a college house that paid for itself (and then some)

The Numbers That Matter

Roth IRA compounding example (8% average annual return):

• Contribute $5,000/year from age 15 to 30 → $164,000 at age 30
• Never add another dollar → $2.4 million tax-free at age 65
• Total out of pocket: $80,000

2026 Roth IRA limits:

• Under 50: $7,500/year
• Age 50+: $8,600/year
• Single filers: full contribution below $153K MAGI, phases out by $168K
• Married filing jointly: full contribution below $242K, phases out by $252K

Strategy #1 — Hire Your Kids

If you own a legitimate business, you can hire your minor children to do real work and pay them a reasonable wage. Here’s why that’s a big deal:

• Their wages are a deductible business expense. If you’re in the 32–37% federal bracket, that’s real money shifted out of your tax bill.
• Sole props and single-member LLCs get an extra break. Wages paid to children under 18 are exempt from Social Security and Medicare taxes — that’s another 15.3% in savings.
• Your kids pay taxes at their own rate. With the 2026 standard deduction, most minors owe zero federal income tax on the first chunk of their earnings.

What counts as legitimate work? Social media content, filing, office cleaning, errands, video editing, client file organization. The work has to match the child’s age, be documented with timesheets, and pay a reasonable market wage. Run payroll like any other employee.

The rule of thumb: You can’t pay a seven-year-old $40,000 to “organize your desk.” You can pay a fourteen-year-old $10–12/hour to manage your social media scheduling.

The Part Most People Skip — Teach Them to Actually Manage Money

Don’t just funnel every dollar straight into a Roth IRA and call it done. When your kids get paid, let them manage some of that money. Give them real decisions. Let them feel what it’s like when $200 disappears faster than expected. Let them experience the satisfaction of saving up and buying something themselves.

David’s philosophy: “How we handle our money should positively impact our lives and the lives around us.” That doesn’t start at 25. It starts when they’re young, when the stakes are low and the lessons are cheap.

The Roth IRA Angle

Once your child has earned income, they’re eligible for a custodial Roth IRA. You can contribute up to their earned income (max $7,500 for 2026) — and you can gift them the money to fund it. The IRS only cares that the earned income exists.

Sit with this number: $5,000 per year from age 15 to 30, at a very average 8% return, becomes $164,000 by age 30. Let it sit untouched until 65 and it becomes over $2.4 million. Tax-free. That’s not a typo.

Strategy #2 — Build Their Credit Before They Need It

Add your child as an authorized user on one of your credit cards. When you do, your account history — payment history, utilization rate, account age — starts showing up on their credit report. By the time they’re 18 and applying for an apartment or a car loan, they’re not starting from zero.

The honest risk: If your child has the physical card, they can max it out. And there’s very little you can do about it legally — you added them, the bank doesn’t care about family dynamics.

The practical solution: Add them to the account for the credit-building benefit, but keep the card in your wallet. The credit history still builds. That’s the whole point. When they’re ready, have the real conversation about credit before the card becomes a spending tool.

Strategy #3 — The College House Play

When David’s first child went to college, instead of paying for a dorm, the family bought a house. Three bedrooms — their kid took one, they rented out the other two. The rental income covered the entire cost of the house: mortgage, taxes, insurance, everything. Free housing. Plus the house appreciated in value.

Compare that to four years of dorm payments: money gone, no equity, no asset, nothing to show for it.

Is this for everyone? No — you need capital for a down payment, a market where the numbers work, and a kid who can manage roommates. But if you’re a business owner with assets and your kid is heading to a college town with reasonable real estate, this is worth running the numbers on seriously.

Resources Mentioned

• 📊 Free Sellability Score Assessment — Find out how valuable and sellable your business is right now: weeklywealthpodcast.com/sellabilityscore
• 📅 Book a Free Vision Call — A real conversation about your business, your family, and your financial future. No pitch, no pressure: weeklywealthpodcast.com/vision

Connect With David

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The Weekly Wealth Podcast is published weekly for business owners, high earners, and anyone serious about building wealth the right way. Find us on Apple Podcasts, Spotify, or wherever you listen.

This content is for educational purposes only and is not intended as tax or legal advice. Please consult a qualified professional regarding your specific situation.