Payroll - Employing your child
Situation: A sole proprietor does not have any employees but hires his child (age below 18) to help in his trade or business. Pub15 says the pay is not subject to FICA/Medicare taxes nor FUTA. From my searches, some tax advisors recommend not to report the pay thru a 1099 but filing a W-2 is recommended so that the child will have a support for contributing into a ROTH.
So from that, I guess the filing of W2/W3 is necessary but Form 940 is not required, am I correct?
Do we need to file Form 941 even if the only employee he has is his child and there are no withholding taxes and medicare taxes to report?
I hope you hear your inputs.