Put Your 3-Year-Old on Payroll?

💵 Create Your Free Budget! Sign up for EveryDollar ⮕ ter.li/6h2c45
📱Download the Ramsey Network App ⮕ ter.li/ajeshj
🛒 Visit The Ramsey Store ⮕ ter.li/7vyom2
📞 Have a question for the show? Call 888-825-5225 weekdays from 2-5 pm ET or send us a message ter.li/n88ly5
Explore More Shows from Ramsey Network:
🎙️ The Ramsey Show ⮕ ter.li/ng9950
🍸 Smart Money Happy Hour ⮕ ter.li/9gcp3d
🧠 The Dr. John Delony Show ⮕ ter.li/2u3mc0
💰 George Kamel ⮕ ter.li/1elws8
💡 The Rachel Cruze Show ⮕ ter.li/n2u6jc
💼 The Ken Coleman Show - Highlights ⮕ ter.li/1rbjr2
📈 EntreLeadership ⮕ ter.li/ktxv2k
Ramsey Solutions Privacy Policy
www.ramseysolutions.com/compa...

[@Zdude80]

Bro took "the baby steps" to a whole other level

[@nrg1123]

You know when Dave calls you "honey" he's about to lay down the law 😂

[@Tashas_Travels]

😂😂😂😂 so true.

[@daniellepreyar]

"Honey, 3 year olds are not allowed to work... just use some common sense" 😂😂🤣🤣😅😅

[@Maria-In-Motion]

I bet his accountant is an informant for the IRS. 😂😂😂

[@tracygaluszynski1868]

That would be entrapment.

[@mattbenz99]

It is more that this is a trick for a lot of business owners, but not universally applicable. Like Dave said, a baby can be a model. So if your business uses your kid as a model, you can pay them. Heck, your business doesn't even need to pay the full $6500 to max out the IRA. Once they qualify for an IRA, you can personally gift your child the remaining to max out the IRA. The accountant took what is a real strategy, and blew it up to comical levels.

[@AyeJye]

His accountant is actually him 😂

[@jasonjenkins2078]

Damn, you are right.

[@fhuber7507]

Caller's accountant wants him to commit tax fraud...

[@stevenporter863]

Creative but not thought through. I think a Roth holder has to have taxable income at least the amount of the contribution.

[@rthilson]

@@stevenporter863 you could pay them $12,000 plus the standard deduction is that so no tax owed

[@BachBeethovenBerg]

@@rthilson Pretty sure they'd still be liable for Fica

[@orangemountain457]

I have a sneaky suspicion that the "accountant" is really just the caller.

[@stevenporter863]

@@rthilson Yes, but you may need to reasonably justify paying baby $12,000 just as you would any other employee.

[@28goldenboy]

Make the 3 year old a model in a marketing campaign.

[@alonabeck713]

Please don’t. Kids deserve to have an actual childhood! My mom was single, stressed, stretched thin and as a result thought I was “so grown up” at the age of 8 (she doesn’t think that any more btw). BUT I raise my kids with predominant thought in mind - for their childhood to be nothing like mine was.

[@dariaharruff7025]

U can't force a three year old to work kids have rights

[@face-in-the-crowd]

Make

[@dariaharruff7025]

@@face-in-the-crowd oh I'm sorry

[@TheCountryCouponer]

Photography in the parents marketing campaign is literally 30 minutes to an hour out of their life!!!! Playing the dog something they already do in love! I’m sure they would trade that small amount of time as a child for millions of dollars when they go to retire, when they’re age 60 ❤ definitely don’t put them on the payroll, but issuing them at 1099 for contract labor is completely ok for specific jobs that they actually did!

[@codymcquillen5098]

I love it when Dave calls other guys, Honey! lol

[@NewLifestyleMentor]

If this guy’s “accountant” suggested it, then he needs to find a new accountant immediately. That’s just extremely bad tax advice!

[@amde8554]

Agreed he should be explaining gift limits to him instead

[@orangemountain457]

I suspect the accountant is just the caller.

[@fsmoura]

_If he's old enough to use the potty, he's old enough for the punch clock! That's how we roll in this household!_

[@xiomaragomez6649]

😂😂😂😂😂I can't.

[@dariaharruff7025]

Anyone who makes a little kid work is a jerk 😡

[@merriem24]

😂

[@kvedwards1971]

LMFAO🤣😂🤣😂

[@TheSoulCrisis]

@@dariaharruff7025work work work work work 😂😂

[@JustinCase780]

Dude setiously?.. who do you wish to speak with first.. the IRS or CPS?

[@RomonaFoster]

I lost it when I heard him say 3 years old. 😂 Dave did a good job keeping a straight face.

[@carojames6776]

Rachel wanted to bust a laugh, great self-control though.

[@RomonaFoster]

@@carojames6776 I know, right. 😂

[@spankynater4242]

He could put pictures of them on flyers, and boom, they’re paid models.

[@StanTheMan4]

This guy’s “accountant” has been watching to many instagram reels and tik toks.

[@mensb1936]

Tick talk

[@floresnashvilledrummer]

"Research".

[@klwarhouse]

I put my 5 year old on the payroll. Shes now 7 and our best employee. Serious, shes our best employee.

[@davidsensing2664]

I am an Enrolled Agent and have several clients that own businesses that do hire their kids to work for them. I stress that their kids must be treated like an employee with set duties and a time sheet. Also, their kids must be able to do the work and the pay must be market rates. Accountant that suggested that needs to be fired. The job of an accountant is to assist you with legally filing your taxes...not to help you help you cheat the government.

[@MathiasJarlson]

The government cheats the public, F em.

[@MrPmsavage001]

You the type to snitch on yourself 😂 fuck the government

[@tammya5403]

Agreed, weird the accountant would suggest that

[@patoh1679]

The system is rigged

[@davidsensing2664]

@@patoh1679 how?

[@orangemountain457]

I have a sneaky suspicion that when Dave calls the accountant a moron 1:48, the caller is laughing because the accountant is really the caller.

[@miaaugustine4321]

My husband is a carpenter and one time he accepted a cash payment because the lady insisted. He literally copied the cash and included it in his taxes. Nobody wants to risk dealing with the IRS.

[@Whiskerman]

Your husband is way too paranoid

[@miaaugustine4321]

@@Whiskerman - yes, and honest.

[@davewarrant8673]

When my son (15 at the time) got his first job working for the neighbor (who runs a fabrication business) I made sure he paid taxes so he could open a Roth IRA, we opened him an E*Trade account, I showed him how to research mutual funds. When he got to college he showed his 5 room mates how to open one. They took that knowledge and caught that Wall Street bets/Gamestop thing, used what they made to pay for school... Luck favors the prepared. Teach your kids investing.

[@brittany261]

1. He needs to fire his accountant. 2. I'm a Forensic Accountant, and if I audit this young man business, this right here will raise red flags and a lot of questions to be asked.

[@benjamingreen7884]

What do you mean raises questions? It's either illegal or its not. It's that simple.

[@fauxbro1983]

Lol. The baby putting in work. Why you hating

[@brittany261]

@@benjamingreen7884 Correct. As long as they can provide proof of work.

[@mike7933]

@@benjamingreen7884 it’s a form of tax evasion, from a tax accountant. (At least from the example in this video, it’s a case by case thing) I would not recommend doing it. Who is to say what a reasonable fair market rate is for a 3 year old from a family member (conflict of interest). Since the dad benefits from paying his son more rather than less money. You would also have to adhere to child labor laws, so you can’t hire a 3 year old for random office work.

[@greggalletta8679]

It’s OK to do this as long as you don’t get caught. Wink, wink.

[@random-nz7dy]

Dave: Tell the 3-year-old they're not to see the inside of a playground unless they're working in one. Until they get this freaking MESS cleaned up. Good lord! Deloney: mmmm. The child doesn't feel safe.

[@twinblade63]

LOL

[@jayden4606]

😂

[@TheSoulCrisis]

😂😂😂

[@hckycpa20]

Lol, best comment ever.

[@honzomanzo7789]

The accountant probably saw it on TikTok. Everyone keeps pushing that on social media; “put your kids on payroll and open an LLC”. Meanwhile they don’t even know what LLC stands for.

[@enngee2339]

I clicked this video because I misread the title as a 3 yo on _parole_ , but this is just as wild.

[@r8alvar]

The way I was raised, being called honey in a man to man conversation is fighting words.

[@retrojay86]

😂😂

[@vivianp5962]

Huh? I don't get it?. But that's ok. At least they seem to have your back. Guy-girl, girl- guy, Guy-guy, girl+girl,etc. Because being called "Honey" is a god sent that they have your back or being used. Either or.

[@georgewagner7787]

Dave's old enough to be his dad.

[@amireallythatgrumpy6508]

You clearly were not raised.

[@retrojay86]

@@georgewagner7787 a man has never called me honey

[@lorymanriquehyland]

I can’t stop laughing ….😂

[@jayanthony0814]

Rachel wanted to scam the IRS 🤣 when she asked how often do they audit 🤣🤣

[@gingerhysell9505]

If he's got money for his kids, put it into a 529! Let that compound interest work so your kids have post-high school options of either college or trade school with no debt!

[@khanhnguyen-hy6hg]

Yes, and after all of that, if there is some left over (and the 529 account is older than 15 years), the kid can start rolling the left over in the 529 into his/her Roth IRA. Before you saying "No you can't", this is the newer feature of the 529 account starting in 2024.

[@jamesrichardson2191]

True but if they get a full ride like I did the 529 becomes a huge headache and bundle of unnecessary fees with strings attached

[@danielr7903]

the children yearn for the mines lol

[@SpoonHurler]

"Well the 3 year old rolls around with the puppies to make sure they don't have fleas... How does he tell us? Well, Junior either gets fleas too or not... It's a full time job." -From a future audit, probably

[@TheCountryCouponer]

😂😂😂😂

[@LifeBindeR222]

Well my cat cleans herself a lot so he gave me a great idea, I'll put my cat on a payroll as housekeeper and deduct her salary from the taxable income ☺️

[@merriem24]

😂

[@GATOWN]

Do the opposite of this. Max out your 3 yo credit, that way when hes an adult his credit is ruined, and he has to work harder than everyone else to survive and hes forced to be successful

[@alexroberto6353]

My three year old has more money than I had at 23.

[@eemr8439]

The accountant is watching too many tik tok "tax advisors" haha.

[@austinfrazier7325]

At 7 years old I was a busboy in my parents’ restaurant on payroll. This was back in the 80s.

[@scotttracy9333]

There wasn't too much child labor laws back then.

[@arfriedman4577]

Some usa states allow kids to work in family business. I had a monthly paper route at age 10 with my mom and sister.

[@KST6382]

This guy’s “accountant” makes Tik Toks 😂

[@nosondaitchman9073]

I know someone who did this. And then by covid when they jacked up unemployment benefits, he fired his wife and kids and made 600 per week per kid.

[@ckolodin]

I put my daughter on the payroll as soon as turned double digits. She was fantastic. She filed, and cleaned and staged homes during her tenure. She spoke to agents and clients very professionally. The best thing I did was taught her to use Quickbooks. She graduated from her university and now is gainfully employed.

[@leecc1574]

Maybe they can be consultants 😂

[@georgewagner7787]

Better than his accountant

[@sadenight]

His children can be in the advertisements for the business and get paid legally for their time. Next time you see a dentist advertisement, 9 times out of 10 it will be a family photo. This is an unorthodox legal tax strategy.

[@prestonj.7687]

dave’s face in the thumbnail😂

[@joselozano356]

What ever happened to child labor laws this is insane

[@TheSoulCrisis]

Damn talk about starting early…….working straight out the pampers. 😂😂

[@BusArch42]

I worked for a small business that had mom, dad and both teens on the payroll. The problem was they didn’t actually come in and work. The dad was hard working and was usually in another city running other businesses. While he was not around, the rest of them just didn’t show up. I couldn’t understand how they expected me on Saturday to work the place alone and somehow clock out for breaks and lunch. It was awful. The father approached me and Sid the accountant said you are not clocking out for lunch and we can get in trouble. I asked if he wanted me to just leave the machines running and lock the door? I’m not clocking out at minimum wage and working for free. That’s when it came out that his wife was supposed to be working that entire time with me. They were paying her but she never came in before noon on Saturday the entire two years I was there. We did about 75% of our business on Friday night and Saturday (according to what the dad told me). Yet the bulk of staffed hours were during Monday to Thursday! I worked 230 am to 1230 - ten hours straight on saturdays with no breaks. Totally illegal. I also worked Friday 5 to close so 15+ hours out of 19. His wife was so mad (I didn’t know why either) that I had spilled the beans on her scam. People who try to run their business like this will end up going under. After I left they sold the business.

[@winewoman224]

The ridiculous contortions people assume when trying to not pay taxes. BTW- a five year old doesn’t walk a dog,the dog walks them……

[@johndone8045]

This biden bullshit doesnt deserve any tax dollars

[@janellef6902]

Haha very funny

[@damondiehl5637]

My dad was a commercial fisherman and from the time I was very small I was in the boat helping him raise nets and sort fish. When I was about eight I started working with him in our market, dressing fish. He skinned them and I headed and gutted them. Saved him from hiring a man.

[@dacokc]

the urgency for compound interest is even more important to him than his kids...

[@joelkaben]

Lol, funny caller 😂

[@kelligreer3975]

I think the IRS auditors were after Dave!!! LOL

[@amireallythatgrumpy6508]

He gets audited every year They routinely audit anyone who has a net worth over $100M...

[@StitchPup]

My ex and I owned a business and I kept the books. I had an accountant suggest something similar. I said, "Honey have you met my kids?" LOL.

[@krobdawg]

Nah he gotta be trolling lmao

[@bigbillmusic]

Real talk. Sound like a cartoon having a baby walking some dogs 🤣 he needs to take of his finances 1st before anything else

[@2themaster]

I have a business with my wife. My account also brought up this idea a few months ago. I have a 6 year old daughter.

[@fsmoura]

Dave, I put my toddlers on payroll. Some peeps in the family think it's too harsh, but I think it's good for them, plus they look cute in their little overalls. Please advise.

[@eemr8439]

Wait until you get audited haha.

[@unfairsanic5089]

Recipe for disaster 😂

[@MrPmsavage001]

@@eemr8439 your allowed to have family work if underage

[@3monsterbeast]

omg the dogs 😭

[@sharontabor7718]

I know someone who put his kids as the owners of his business and he pays them rent for the building. The rent is money for their college fund that he gets to write off as a business expense.

[@danayarbrough1494]

This ninja called in to say he’s hiring his 3 yo for a dog sitting business 😂😅😂😅😂 whew lawd

[@skylarofcourse]

Make the 3 year old a model for your company

[@AyeJye]

I’ve seen people on tick tok and on the internet who say to put your kids on payroll !

[@silverltc2729]

Legend.

[@SeanOBrien77]

I’m self-employed and I don’t like paying taxes as much as the next guy, but I can’t stand scumbags like that, ones who take advantage of things to that extent that it’s fraudulent.

[@texasskygirl7890]

I can't believe they took the call. How embarrassing.

[@ering7733]

I would focus on paying off debt and saving for your own retirement so your kids don’t have to worry about you when they are adults. Once your on good financial ground you could do the kids Roth or 529 plan

[@kathryncashner3294]

If you own a business, employing your kids can be a great way to get them started in work life. Depending on what they do and how many hours they work (summers?) they can earn enough to contribute to their social security account, Roth, etc. But as Dave said, you MUST follow the law. Track their hours and duties, pay them with a 1099 or W-2, file taxes for them, etc. Depending on what happens later in their lives, this can be important. But at 3 and 5....no way outside of modeling or commercials for children/infant products.

[@Justagirl325]

I just heard someone online to say that put your kid on payroll no details smh lol

[@joeb1522]

How could anyone explain to a tax court judge with a straight face why they paid wages to a 3 year old?

[@natedogg890]

The IRS has entered the chat

[@RRK1]

Kid will be on payroll by the end of the week.

[@Raegoul]

My dog makes appearances on my wifes twitch stream via channel point redemptions. Can we pay my dog an appearance fee? ROFL

[@michaelpezzino]

I'm a CPA, and my family and friends are constantly sending me these types of videos so that we can employ these schemes in my wife's business. I explain to them that I would be held to a much higher standard than the idiot business guru on TikTok with Cheeto dust on his fingers living in his mother's basement.

[@philwood3396]

"Never ascribe to malice that which is adequately explained by incompetence". He did admit he's just now finding out about compound interest so this quote could ring true. But maybe it's not one or the other. I sense a bit of malice in trying to use his kid to profit and trying to pull one over on the law.

[@DrMuffins354]

Everything is business expense until you get audited

[@wbae1340]

Invest in passively managed ETFs and mutual funds, instead of actively managed mutual funds!

[@RCWeldingsgarage]

Lol, i hope that the IRS isn't watching this video. This is the dunbest caller I've ever watched on the Ramsey show.

[@Sahith_Thopucherla]

Man tried to game the irs. A 3 year old does my taxes!

[@mark_ee3356]

Beware of scammers offering unreal profits they make money only if you give it to them

[@dickjohnson5211]

Hi Rachel

[@ebonneenelson2325]

What’s wrong with a custodial account? That’s what my almost 3 year old and my 1 year old have. I feel so proud as a parent that my babies are starting their lives in the black 😊

[@WalkAloneMedia]

The benefit to the Roth IRA is tax free gains. The custodial account is taxable

[@mimimonster]

Somebody needs to fire their “accountant.”

[@marcenelj]

This is wild lol

[@carmeshacarrington6718]

Actually you can pay the 3yrs of lfor play therapy with the dog or ads for their company. Feeding the dog, getting the dog water, there are things a 3yr old can do and get paid

[@JoeoftheWest]

Sounds like "Render to Caesar the things that are Caesar’s, and to God the things that are God’s." I think this applies even if you aren't a Christian.

[@MistaTofMaine]

If reasonable can actually be a good idea. I worked over the table my first summer jib when i could have worked under table. I used little of money i earned from that fish farming job (just over minimum wage) and almost all went into roth ira i started. I was 15 and some people thought was stupid why id claim but because my yearly income was so low little was paid in tax anyway. The 2000 or so i put in is more like 20000 now.

[@CarlGorn]

That accountant wants you to land in prison. Fire him, now.

[@margotk538]

Caller should report the accountant from advising him to commit tax fraud. The IRS is no joke and he can go to jail for it. Was his accountant Saul Goodman? 😂

[@tomassmith2088]

Nah Saul would set it up so you don't get caught. This is walmart Saul Goodman. Saul Goodman at home

[@genxx2724]

No, but when he gets prosecuted in Federal Court, he Better Call Saul!

[@Thebulbacardi]

AT 4:14..... Relax Rachel your goin to get your time😬

[@JakeSpradlin2]

Ahahahhah, 3 years old grinding daily

[@MakeAmericaPlumpAgain]

Put the 3 year old on top of a dog and grab a camera and start marketing 🤣

[@Delta-qz3mb]

With these investment steps, isn't he basically saying put money into big companies and just piggyback off of them? Especially in mutual funds since the money is going hundreds of directions. Am I wrong to see it as a piggyback system basically?

[@ryanl3812]

Wealthy people do this all the time. It's not crazy, it's just a tax maneuver above most of our tax brackets. This is not for the overwhelming majority of Dave's audience

[@northharriscollege]

I doubt any accountant told him that 😂.

[@retrojay86]

😂

[@JakeStewart1343]

He has multiple personalities disorder. One of his personalities is a CPA. 🤷‍♂️

[@eemr8439]

I have heard this before from many "tax advisors" when they say you can put your children to work and pay them up to their standard deduction and then contribute to a roth IRA blah blah. This can be true if the child is actually doing the job and the age that they have allows them to do the job. Also there are other taxes like payroll taxes they have to pay and the business.

[@ronsmith4325]

Nice accountant, suggesting that one commit literal tax fraud.

[@roberthoffmann3313]

Uniform Transfers to Minors Act (UTMA) would work.

[@katyedwards3935]

Have him/her sell lemonade or something and call it a day.

[@Alex-mj5dv]

The absolute minimum age for official employment - which being on payroll officially would be - is I believe 14, with hours rules coming in to force at age 16. Same as in the U.K. when you get out National Insurance number at 16.. that’s when you can be legally ‘employed’ and make NI contributions. The only exceptions are things like paper rounds, unofficial and cash in hand things. This is not that and they are an infant … fire your accountant

[@greggpurviance7252]

@@silentnot4812 exception is family business

[@austinfrazier7325]

@@greggpurviance7252 yes I was a busboy at 7 in my parents restaurant on payroll. Worked my a$$ off for minimum wage.

[@natebise6424]

I think the hire your kid law begins at 12 in the US, it may vary from state to state

[@DMS20231]

You can justify paying them once they can clean their own rooms. That’s something you could pay someone else to do. So you can hire them to do it. Before that, nah.

[@wickedbird1538]

😮😮I had a friend who put his wife on payroll, over $100K. The IRS disallowed the wages because they determined that she wasn’t doing any real work. They hit him with a huge penalty.

[@Jim_Curtis]

The guy needs to talk to a legit tax accountant instead of calling Ramsey, who is not licensed to give tax advice. Dave is right in this case, but he is still not licensed to give tax advice.

[@MattSmith-vr4sr]

Im picturing the 8 year old smoking a pipe after his coal mine shift in 1890 lol

[@claybob]

His accountant wouldn’t have told him to do that if it wasn’t common practice. Paying a family member to not work at your company is just as much theft from the rest of the employees as taxes are theft.

[@thegamsta7133]

I haven’t really heard about this being a common practice. I think most accountants realize how risky it would be.

[@christinab.2864]

Hold up a three old can sort out by colors and squares even better they attitude are the best they don’t think it’s work it’s play. Besides I still have arguments with my brunch about if a three year old can sort by color then I can sort the mail. I would like to hear your opinions on this issue.

[@bellareina05]

My 2 year old walks the dog all the time

[@karlabritfeld7104]

The accountant sounds pretty shady to me...