Business Owner's Trump Account Playbook: Pay Kids, Deduct Wages, Fund Accounts

If you own a business — even a single rental property — you have a tax advantage that W-2 employees do not. You can pay your children a reasonable wage, deduct it as a business expense, and your kids use that money to fund their Trump Account. The net effect is an indirect tax deduction for Trump Account contributions.

This strategy has been used by tax-savvy families for decades with Roth IRAs. Trump Accounts make it even more powerful because there are no income restrictions and you can later convert to a Roth IRA at age 18.

How the Strategy Works (Step by Step)

1. Your child does real work in your business — filing, cleaning, data entry, social media, yard work on rentals, etc.
2. You pay them a reasonable wage — what you would pay any non-family worker for the same tasks.
3. You deduct the wages as a business expense on your Schedule C, E, or corporate return.
4. Your child files their own return (or you file for them) — the first $14,600 is tax-free under the standard deduction.
5. Your child contributes to a Trump Account — up to $5,000/year.
6. Optional: they also fund a Kids Roth IRA — up to $7,000/year (or earned income, whichever is less).

The Math: A Family Saving $12,000/Year

The parent saves $2,880 in taxes. The child pays $0 in taxes. And $12,000 flows into tax-advantaged accounts — $5,000 in a Trump Account and $7,000 in a Roth IRA. Do this for 10 years and the child could have $200,000+ in tax-advantaged savings before they turn 18.

Yes, Rental Properties Count

This is the point many families miss. You do not need an LLC or a storefront. A rental property is a business activity. If you own even one rental, your children can do legitimate work on it:

• Yard work and landscaping at the rental property
• Cleaning between tenants
• Painting, minor repairs, organizing
• Administrative tasks — filing paperwork, entering expenses into a spreadsheet
• Photography for listings
• Helping with showings (older teens)

The wages you pay are deducted on Schedule E as a rental expense. If you are not currently deducting them (because of the passive loss rules), the deductions accumulate as a passive loss carryforward — you get to use them when you eventually sell the property. So even if the deduction is delayed, it is not lost.

The FICA Exemption: Why Sole Proprietors Win

If your business is a sole proprietorship (or a spousal partnership) and your child is under 18, wages you pay them are exempt from FICA taxes — no Social Security tax, no Medicare tax. This saves an additional 15.3% compared to hiring a non-family employee.

The Stacking Playbook for Business Owners

Business owners are uniquely positioned to stack multiple tax-advantaged accounts in the same year. Here is the priority order:

Priority 1: Kids Roth IRA ($7,000/year)

Your child needs earned income to contribute. If they work in your business, they qualify. The Roth IRA gives total investment control — stocks, real estate, crypto, private companies. Growth and withdrawals are tax-free. Contributions can be pulled out anytime for college or a first home. This is the most flexible account.

Priority 2: Coverdell ESA ($2,000/year)

If college or trade school is a priority, the Coverdell is unmatched. Self-directed (invest in anything), tax-free withdrawals for education, and you can use it for K-12 private school too. The limit is only $2,000/year, but it compounds. Income phaseouts apply ($110K single / $220K married), but business owners can often manage AGI to stay under.

Priority 3: Trump Account ($5,000/year)

No income restrictions. No earned income requirement. Tax-deferred growth. Converts to a traditional IRA at 18, then you can do a Roth conversion during your child's low-income years. The downside: limited to S&P 500 index funds. The upside: no income limits and no phase-outs.

Priority 4: 529 Plan (varies by state)

Best for grandparents or high earners who have maxed everything else. High contribution limits (often $300K+ lifetime), state tax deductions in many states, and the SECURE 2.0 provision allows converting up to $35,000 to a Roth IRA after 15 years. Less flexible, but powerful for college savings.

What This Looks Like in Practice

A business-owner family paying their child $14,000/year could fund all four accounts — $7,000 Roth + $2,000 Coverdell + $5,000 Trump Account — for a total of $14,000 in tax-advantaged savings. The parent gets a $14,000 business deduction. The child pays $0 in income tax (under the standard deduction) and $0 in FICA (sole prop exemption).

Real Example: The Landscaper With Two Rentals

Meet Sarah. She runs a landscaping business (sole prop) and owns two rental properties. Her 14-year-old son helps mow lawns on the weekend and cleans the rentals between tenants.

• Son earns $12,000/year — $8,000 from the landscaping business, $4,000 from rental work.
• Sarah deducts $12,000 — $8,000 on Schedule C, $4,000 on Schedule E.
• Son's tax bill: $0 (under standard deduction). FICA: $0 (sole prop exemption).
• Son contributes $5,000 to Trump Account and $7,000 to a Kids Roth IRA.

At Sarah's 24% tax bracket, the $12,000 deduction saves her $2,880 in income taxes plus $1,836 in self-employment taxes (15.3%). Total tax savings: $4,716/year. Meanwhile, her son is building two tax-advantaged accounts that could be worth hundreds of thousands by the time he is 30.

Common Mistakes to Avoid

• Paying unreasonable wages. Do not pay your 8-year-old $50/hour to sweep the floor. Pay what the work is actually worth. $10-$20/hour for age-appropriate tasks is defensible.
• No documentation. Keep time sheets, job descriptions, and pay records. The IRS wants to see that the work is real.
• Paying in cash with no paper trail. Use checks, Venmo, or direct deposit. Document every payment.
• Forgetting to file the child's tax return. Even if they owe $0, file a return to establish the earned income on record.
• Skipping the Trump Account election. You still need to file IRS Form 4547 to open the Trump Account. Paying your child does not automatically create one.

The Bottom Line

Business owners — including rental property owners — have a unique advantage. By paying your children for legitimate work, you create a tax-deductible pathway to fund their Trump Account, Kids Roth IRA, and Coverdell ESA. The parent gets a deduction. The child pays no tax. And the money compounds in tax-advantaged accounts for decades.

This is not a new trick. Families have used the "hire your kids" strategy for years with Roth IRAs. Trump Accounts just add another $5,000/year of tax-advantaged space to the stack — with no income restrictions and a built-in Roth conversion at age 18.