If you own a business, let the IRS pay for your child’s education. Well sort of. If you hire your child to file or clean the office and paid them a total of say $5,000 during the year. Instead of giving the child the $5,000 put it into an Roth IRA or Self-directed IRA.These are not taxed until the money it taken out. The catch is that if the money is used for education any income remains tax free. For example, if your child works for you for 5 years and you put $5,000 into their IRA every year. The child would have $25,000 to use for college. Then if that same IRA made additional money [say on tax liens or tax deeds] that would give the child even more to spend on education.

If the child is a under 17 you would not need to withhold taxes. You would need a W-4 showing exempt in your files for each child as well as other employee forms.

You would be able to deduct the $5,000 of payroll on your business taxes.