According to Tom Copeland, “…the simple answer for a family child care provider is – only in a few unique situations.”   If you hire your own child who is age 18 or older or if you pay your husband to do work for your business you must treat them as an employee – and that means they pay taxes and you must withhold the right taxes, and may have to have worker’s compensation insurance.

That means withholding Social Security/Medicare taxes and withholding federal and state income taxes.  On top of that – if your child or husband is over age 21 you must also pay federal unemployment tax. While you can deduct these taxes as a business expense, your child or spouse must report their earnings as income on their IRS Form 1040, just as they would working for any company. Get the rest of the story here.