Here's a great tax-saving idea for those who have teenagers who can work part-time in the family business. Hire the kids as legitimate employees. This strategy works best if your business operates as:

• A husband-wife partnership (owned only by you and your spouse).
• A husband-wife Limited Liability Company (LLC), which is treated as a husband-wife partnership for federal tax purposes.
• A sole proprietorship.
• A single-member LLC, which is treated as a sole proprietorship for federal tax purposes.

This same strategy also works well (though not quite as favorably) for other types of family business entities, such as a C or S corporation, a partnership or LLC that's not owned strictly by a husband and wife. Businesses organized as corporations do pay Social Security tax on the wages of a child or other relative, both at the individual and corporate level.

The best-case scenario is when the business operates as a husband-wife partnership or sole proprietorship.

As long as your employee-children are under age 18, wages paid to them by the family business are not subject to Social Security, Medicare or federal unemployment (FUTA) taxes.

The news gets better. In 2018, a child can also shelter up to $6,500 (up from $6,350 in 2017) of wages from federal income tax with his or her standard deduction. Bottom line: Your child will probably owe little or no federal income tax at the end of the year.

Your Side of the Deal Is Equally Appealing:

• You get a business deduction for money that, as a parent, you probably would have given your child anyway.
• This write-off reduces both your federal income tax and self‑employment tax bills.
• Your adjusted gross income (AGI) is lowered, which means there is less chance that you'll be subject to unfavorable AGI-based phase-out rules.

Meanwhile, your child can save some or all of the wage money and invest it. The investment earnings and gains will be taxed at your child's low rates. This assumes the "kiddie tax" doesn't apply to your child's investment income.

With good planning, some of this investment income can eventually be used to pay part of your child's college expenses, which means the savings can stretch far into the future.