"Pay your kids $15,000 tax-free": real strategy, fictional number

Primary sources: IRC §162 (ordinary and necessary expense); IRC §3121(b)(3) (family employment FICA exemption); standard deduction rules

The honest short answer

Hiring your children in a genuine sole proprietorship or partnership of parents is a real, well-established strategy: their wages are a deductible business expense to you, and if the business is a sole proprietorship or a partnership owned entirely by the child's parents, those wages are also exempt from Social Security and Medicare tax under §3121(b)(3). The number circulating online — "pay them $15,000+ tax-free" — tracks the standard deduction, which is real for income tax purposes. What gets skipped: the wage has to reflect real work, actually performed, at a reasonable rate for that work — not a round number backed into because it matches the standard deduction. Paying your 7-year-old $15,000 to "model for the company Instagram" for four hours a year does not survive an audit; paying your 16-year-old a reasonable hourly wage for genuine, logged administrative work might.

What's legitimately true in the pitch

The FICA exemption for children employed by parents in an unincorporated business is real and a genuine payroll tax savings, not available if the business is a corporation.
The child's standard deduction shelters their earned income from federal income tax up to the annual threshold, same as any taxpayer.
The wages are a legitimate, deductible business expense to the parents' business when the work and pay are genuine.

Where the pitches mislead

The wage has to be reasonable for the actual work done — the same standard the IRS applies to any business's wage deductions. A number chosen to match the standard deduction, unconnected to real duties and hours, is the audit target, not the strategy.
The FICA exemption disappears if your business is a corporation (S-corp or C-corp) — a detail some viral posts skip entirely, leading owners to assume the full benefit applies when it doesn't.
"They don't have to actually do anything, just put them on payroll" is not the strategy — it's the version that gets disallowed. Time records and age-appropriate real duties matter.
Kiddie tax can still apply to any unearned income the child has separately, though it doesn't apply to genuinely earned wages from real work.

The math the pitch never runs

Ask what specific, real, age-appropriate work your child will do, how many hours it reasonably takes, and what a non-family employee would be paid for that same work. If $15,000 doesn't map to any of that, the number is backwards — picked for the tax result, not for the job. An IRS examiner testing this deduction asks exactly this question, and "I paid that amount because it's the standard deduction" is not a defense.

Questions to ask before you set this up

Is my business a sole proprietorship or parent-owned partnership, or does the FICA exemption not apply to my entity type?
What specific work will my child do, and how many hours does it reasonably take?
Am I keeping contemporaneous time records and paying a defensible rate for that work?
Would I pay an unrelated teenager this same amount for this same work?

Our position: hiring your children for real work in your unincorporated business is a genuinely good strategy worth using. Backing into a round-number "tax-free" wage disconnected from actual duties is the version that turns a legitimate deduction into an audit finding.

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This review discusses a category of tax planning and social media claims generally, and is not legal or tax advice for any particular situation.