Financial Education & Community Classes

What it means: A spouse can be paid for real work. For a business to deduct employee pay, the work and expense must qualify, the pay must be reasonable, and the business must follow payroll rules. Whether the spouse is an employee, partner, or owner depends on the facts and business structure.

Do not confuse a deduction with a credit. A deduction generally reduces the business income subject to tax; it does not automatically reduce the tax bill by the amount paid. Wages are generally income to the worker, and withholding and payroll taxes may apply.

1. List the work. Describe the actual duties, such as scheduling, bookkeeping, or customer service. Estimate hours and decide who directs the work.
2. Set reasonable pay. Compare similar jobs, responsibilities, and local pay. Keep a short written record of how the rate was chosen.
3. Check the setup. Ask a tax professional whether the person is an employee, owner, or partner and how the business is taxed. An LLC's tax treatment can differ.
4. Set up payroll when required. Gather the required hiring forms, track hours, pay from the business account, withhold and remit applicable taxes, and issue a W-2 when required.
5. Review the whole picture. Ask how the business deduction, the worker's wages, employer payroll taxes, and your household's return work together.

Example: If a spouse is paid $4,000 a month for actual qualifying work, that is $48,000 in gross wages over 12 months. It is not an automatic $48,000 tax refund or tax savings. The right amount and tax treatment depend on the work and circumstances.

Questions to ask: Is the worker an employee or a partner? What payroll forms and taxes apply? Is the pay supported by comparable work?

For nonprofits: A charity may pay reasonable compensation for real work that furthers its mission. Family relationships and conflicts of interest call for particular care; independent board review and documentation are important. Charitable funds are not personal funds.

IRS: married couples in business →
IRS: small-business expenses →
IRS: nonprofit pay and private benefit →

What it means: A child can be paid for real, age-appropriate work when the employment is lawful and pay is reasonable. The amount mentioned in a viral post is not a universal tax-free paycheck.

1. Choose a real job. Write down tasks the business actually needs, such as organizing files or helping with permitted office work.
2. Check the child's age, duties, and hours. Federal and Texas child labor rules vary by age, type of work, and business. Some family-business exceptions apply, but dangerous-work rules still matter. Check both sets of rules before work begins.
3. Choose and document reasonable pay. Compare similar work. Keep time records, a job description, and proof of payment.
4. Identify the employer. Ask a payroll professional whether the employer is a parent's sole proprietorship, a partnership, a corporation, or a nonprofit. This changes which employment-tax rules apply.
5. Run payroll correctly. Complete the required forms, make actual payments, file required payroll reports, and provide a W-2 when the child is an employee. A 1099 is not a substitute just because the worker is family.
6. Check the child's return. Federal income tax, income-tax withholding, Social Security and Medicare taxes, and filing requirements are separate questions. Other income and the tax year matter.

2026 tax-year illustration: The regular federal standard deduction for a single filer is $16,100. For someone who can be claimed as a dependent, the standard deduction is generally the greater of $1,350 or earned income plus $450, capped at the regular deduction. For example, if a single dependent child's only income is $10,000 in qualifying wages, the child generally would owe no federal income tax on those wages after the standard deduction. Payroll taxes may still apply, and a return may be needed or useful to recover withheld income tax. Check the rules for the year in question.

Family payroll rule: Wages paid to a child under 18 for work in a parent's sole proprietorship or a partnership in which each partner is a parent are generally exempt from Social Security and Medicare taxes. That exception generally does not apply when the employer is a corporation or a partnership with a nonparent partner; the rules for a nonprofit differ too. Ask about the actual employer and other applicable taxes.

Questions to ask: Is the job allowed for this age? What is a fair hourly rate? Which payroll taxes and filing requirements apply?

IRS: family employees →
IRS: 2026 tax amounts →
U.S. Department of Labor: youth employment →
Texas Workforce Commission: child labor →

What it means: A revocable living trust is a legal arrangement that can hold property during a person's life and direct what happens to it later. Property properly held in the trust generally passes under the trust without probate. Creating a document alone does not automatically move property into it.

1. Write down what you have. List a home, bank accounts, vehicles, insurance, retirement accounts, debts, and any existing estate documents. Keep account numbers private.
2. Decide what you want to happen. Identify the people you want to benefit and who you trust to manage matters. Consider the needs of minor children or a beneficiary who receives public benefits.
3. Check current ownership and beneficiaries. Review deeds, payable-on-death or transfer-on-death instructions, insurance policies, and retirement accounts. These may pass outside probate under their own rules.
4. Discuss options with a Texas estate-planning attorney. Ask whether a will, a trust, beneficiary designations, powers of attorney, or other documents fit your needs and budget. Ask for the cost before you commit.
5. Put the plan into effect. If a trust is appropriate, ask which assets should be transferred into it and how to complete each transfer. Coordinate beneficiary forms with the plan. Do not simply remove beneficiaries from insurance or retirement accounts.
6. Store and review your documents. Tell your chosen decision-makers where to find them. Review after a birth, death, marriage, divorce, move, or major change in assets.

Example: A parent wants a child to receive a bank account. An attorney can compare an appropriate beneficiary designation with a trust arrangement. The best choice depends on the child's age, the account, and the family's wishes.

Questions to ask: Which assets avoid probate already? How do we protect a minor's inheritance? Which assets need retitling? How long might access take, and what costs are involved?

Remember: A trust does not guarantee immediate access, automatic tax savings, or protection from every creditor. Probate rules and available alternatives depend on the property and state law.

CFPB: revocable living trusts →
Texas State Law Library: nonprobate property →
Texas State Law Library: transfer after death →

What it means: Creating an LLC does not automatically qualify someone for a business loan. There is no general law requiring banks to approve every LLC for $250,000. Some lenders offer applications with less documentation, but approval and terms still depend on their requirements.

1. Define the need. Write down how much you need, what it will pay for, and how the business expects to repay it. Borrow only what the business can afford.
2. Organize the business. Confirm its legal structure, registrations, EIN if required, and separate business records. An LLC by itself does not create a credit history.
3. Gather accurate financial information. Depending on the lender, you may be asked for statements, income records, business tax returns, a business plan, or personal credit information. Never create or alter records to qualify.
4. Compare lenders and financing types. Ask banks, credit unions, and community lenders about eligibility, documentation, and total cost. Consider whether a smaller loan or another funding option fits the need.
5. Read the offer before signing. Ask about the interest rate, all fees, payment amount, repayment period, prepayment charges, collateral, and whether you must personally guarantee the debt.
6. Decide whether payments fit. Include the payment in a realistic cash-flow plan. Verify the lender through a trusted source and protect sensitive information.

Example: A business needs $8,000 of equipment. Instead of requesting the largest available loan, its owner compares offers for the amount needed and checks whether the monthly payment fits alongside rent, payroll, and other expenses.

Questions to ask: What is the total amount I will repay? Is the rate fixed or variable? Is a personal guarantee or collateral required? What happens if a payment is late?

Nonprofit note: SBA 7(a) loans require an eligible for-profit business; a 501(c)(3) generally does not qualify for that program. Nonprofits can ask appropriate lenders and local resource organizations about other options.

U.S. Small Business Administration: 7(a) loans →
SBA: find local business assistance →