Wages paid to your own child belongs on Line 26, wages.
Why line 26
You can deduct pay to your own child for real work at a reasonable rate, but it is almost never line 11. A child working in a parent's sole proprietorship is an employee, so the pay is wages on line 26, with a W-2 and a payroll filing, not a 1099-NEC. The upside of doing it properly is real: wages paid to your child under 18 in a sole proprietorship are exempt from Social Security and Medicare tax, and under 21 they are exempt from federal unemployment tax. Issuing your child a 1099 instead pushes self-employment tax onto them and invites a reclassification.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so wages paid to your own child lands on Line 26 without you sorting it.
Start for freeWhat wages paid to your own child is confused with
- Line 11, contract labor
- Line 11 only fits if the child genuinely runs a separate business serving other customers too, which is rare for a minor working for a parent.
- not deductible, not deductible
- Pay for work that was not actually performed, or far above the market rate for the task, is not deductible at all.
- Line 14, employee benefit programs
- Benefits you provide a family employee, rather than cash pay, go on line 14 employee benefit programs.
Examples that belong on line 26
- A 15 year old paid 14 dollars an hour to pack and label shipments
- A 17 year old paid for 6 hours a week of photo editing for your studio
- A college-age child on payroll at 20 dollars an hour doing data entry
- A teenager paid for weekend cleaning at your retail space
- A child paid to model for your own product catalogue shoot
What does not belong here
- A 1099-NEC to a minor child working under your direction
- Pay for chores at home with no business purpose
- Round cash amounts with no timesheet behind them
- The same deduction in an S corporation or partnership, where the family payroll tax exemptions do not apply the same way
The limit that applies
In a sole proprietorship, wages to your child under 18 are exempt from Social Security and Medicare tax, and wages under 21 are exempt from federal unemployment tax; income tax withholding rules still apply.
What to keep
Run the child through payroll: timesheets showing hours and tasks, a rate you could defend for an unrelated hire, a W-2 at year end, and payment to the child's own account. Cash with no records is the fastest way to lose the deduction.
Other expenses on line 26
| Expense | Line |
|---|---|
| an employee bonus | Schedule C, Line 26 |
| an employee's gross wages | Schedule C, Line 26 |
| payments to your spouse | Schedule C, Line 26 |
| vacation and sick pay | Schedule C, Line 26 |
Related lookups
- Where do subcontractors go on Schedule C?
- Is a car payment deductible on Schedule C?
- Where does employee health insurance go on Schedule C?
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so wages paid to your own child lands on Line 26 without you sorting it.
Start for free