Commodity Wages Save Payroll Taxes for Kids Too!
In my previous post today, I had recapped the wages paid to children being exempt from payroll taxes in certain situations. In the case presented, the wages in fact, were subject to payroll taxes. The one item I had forgotten to mention is that if commodity wages were paid to the children in any of these situations, these commodity wages would not be subject to any payroll taxes. We have previously posted on how commodity wages work.
Therefore, even if you have a situation where cash wages paid to children or even other farm employees are subject to payroll taxes; by using commodity wages you can effectively eliminate these payroll taxes.
Farmers have greater flexibility than almost any other business operation in how wages are paid and payroll taxes that may be due. A non-farm business could pay wages to their children under age 18 and be exempt from payroll taxes, however, they would be unable to pay commodity wages (in most situations).
Special thanks to Kiely Strohmaier in our Moses Lake office for bringing this to my attention.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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