In 2017, up to $6,350 of earned income per child are exempt from taxation. Further, the parent does not have to pay FICA tax for their children under 18 who work for them or their partnership. Corporations do not have that same exemption from paying FICA tax, regardless of who owns it. These earnings by the child can be considered income for a ROTH IRA. The ROTH IRA, as post tax dollars, can be withdrawn without penalty at any time (to include for education), only the earnings will be subject to tax. If correctly drawn out for education, even the earnings are not subject to the early withdrawal penalties. ROTH IRA dollars are not a resource for Federal Financial Aid Considerations; however, by comparison, cash in savings accounts are considered assets. If the child doesn’t use funds for education, they continue to grow as a retirement savings. The disadvantage to a Roth IRA account is the low amount (up to the amount of earned income the child makes or in any case $5,500 maximum) that can be contributed each year.
Agricultural endeavors have an increasingly small margin for error. Operators use GPS guided equipment to precisely apply the calculated amount of seed, fertilizer, and chemical to the ground to produce a crop with the highest potential return on investment. Marketing decisions are made after considering macro and micro economic information sources, predictions on weather, and considerations for next year’s cash demand needs for the operation. Increasingly, specialists are consulted for agronomics, equipment upgrades, and marketing decisions.
Despite all the external support available, sometimes, internal record keeping can make or break an enterprise. Not keeping receipts because of assumptions regarding the other side keeping the copy, failing to document the who, what, when, where, and why of a purchase, or failing to keep accurate records of what the business is doing can come back to bite the operation years down the road.
It is so easy to put off the hard work of memorializing, filing, and storing the supporting pieces to the story of the operation. The current climate of “FAKE NEWS” and conflicting stories from once reputable news organizations will have an impact far beyond the next election cycle. It frames the finder of fact in a future dispute. Documentation and records and the ability to retrieve them become more important, not less, in this digital age. Having “the goods” when you need to produce them can be critical to establishing the legitimacy of the data, and proving that it is not fabricated.
Take a look at your record keeping in your operation. Can you provide the supporting data to the purchases, the agreements, and the transactions you undertake? Sometimes, something as simple as a receipt of payment can establish rights and responsibilities of parties for years to come. When a party to that transaction has selective amnesia, it becomes critical to be able to prove each element of the transaction.