Running a family farm is a lot of hard work. Many farm owners rely on help from people who live right there on the farm — often their children, siblings, or parents. This can make farm work feel like a team effort and a family tradition. But when it comes to paying family members, there are some important rules you need to follow. Just because someone is in the family doesn’t mean you can skip things like taxes or paperwork.

Let’s walk through what’s legal, what’s not, and why it’s important to talk with a tax preparer, CPA, or other tax professional before you pay anyone on your farm operation.

Disclaimer:

Why Pay Family Members?

Paying family members can be a smart part of your farm taxes and tax planning. If done right, it can:

• Help lower your tax return by claiming tax deductions.
• Provide tax benefits to your family, especially for older kids and teens.
• Prepare the next generation for running the family farm.
• Reward the real hard work your loved ones do every day.

But there are limits. The IRS doesn’t let you make up jobs or wages just to cut taxes. There are also state laws and child labor rules you need to follow.

Who Counts as a Family Member?

A family member can be:

• Your spouse
• Your children
• Your parents
• Your siblings
• Sometimes your in-laws, grandchildren, or other relatives

Different rules apply depending on the age and relationship of the person. The IRS, your state’s labor department, and your accountant may all treat these people differently when it comes to income tax, social security, and other farm issues.

Can I Pay My Children?

Yes, but there are age and task rules. Here’s how it breaks down: