Farm kids who participate in farm labor may serve a greater purpose than simply being another helping hand. Farmers who pay their children in exchange for labor could receive large tax breaks while simultaneously building wealth for their children. In 2024, the standard deduction for individuals is $14,600. So, farm kids could earn that much without paying state or federal taxes. That means the farm business gets to take a deduction as high as $14,600 without paying it to the government. Investing those dollars for your children means having your cake and eating it, too.

However, compensation must be within a reasonable scope of labor and there must be a bona fide employer-employee relationship. Farmers looking to take advantage of this tax break should consult with their tax preparer and document everything including a job description and time sheets. Please consult your tax preparer for further information and follow all applicable IRS guidelines.

Read more on tax breaks for working farm families here.