Can I Pay My Spouse or Kids Through Payroll? Oklahoma-Specific Rules Explained

Why It Matters – Family Payroll Is Legal (If You Follow the Rules)

Hiring your family can:

• Reduce your overall tax burden
  
  
• Shift income to lower tax brackets
  
  
• Create legitimate business deductions
  
  
• Provide employment experience or retirement contributions
  
  

But it must be:

• For real work
  
  
• At a reasonable rate
  
  
• Compliant with IRS and Oklahoma employment laws
  
  

Paying Your Spouse Through Payroll

You Can Pay Your Spouse a Salary If:

• They perform real, measurable work (e.g., admin, bookkeeping, customer service)
  
  
• You treat them as a regular employee — timekeeping, job duties, reporting
  
  
• Their pay is reasonable for the role
  
  
• You issue a W-2 and withhold taxes
  
  
• You file payroll returns and submit payroll taxes
  
  

Tax Implications (For Sole Proprietors / Single-Member LLCs):

• No FUTA tax is required for a spouse
  
  
• You still owe FICA taxes (Social Security & Medicare)
  
  
• Wages are deductible by the business
  
  

If you’re an S Corp, your spouse is treated like any other employee — no payroll tax exemptions apply.

Paying Your Children Through Payroll

Can You Put Your Kids on Payroll?

Yes — if they actually work and you document it properly.

This is one of the most powerful tax strategies for small business owners in Oklahoma — especially for kids under 18.



Benefits:

• Kids under age 18 are exempt from FICA taxes (Social Security & Medicare)
  
  
• Kids under age 21 are exempt from FUTA
  
  
• You get a deduction for their wages
  
  
• Your child pays no federal income tax if they earn less than the standard deduction ($14,600 in 2024)
  
  

Requirements:

• The child must actually work (e.g., clean the office, shred documents, create social posts)
  
  
• You must pay a fair market wage
  
  
• You must keep timesheets or documentation
  
  
• You must issue a W-2, not a 1099
  
  
• The child must be a bona fide employee, not just getting paid as a tax gimmick
  
  

Important: This only works if the business is a sole proprietorship or single-member LLC.

If the business is an S Corporation, FICA and FUTA taxes still apply to the child.

Common Mistakes Oklahoma Employers Make

• Paying kids in cash with no records
  
  
• Not issuing W-2s to family members
  
  
• Paying above-market rates with no real job duties
  
  
• Calling it “payroll” but skipping FICA, FUTA, and payroll tax filings
  
  
• Having an S Corp pay a child or spouse and assuming the tax exemptions still apply
  
  

Explore: How to Pay Yourself Legally in an Oklahoma S Corp or LLC »

What About Child Labor Laws in Oklahoma?

Oklahoma allows minors to work with some restrictions:



• Children must be at least 14 years old (exceptions apply for family businesses)
  
  
• Minors under 16 may work limited hours outside school time
  
  
• You do not need a work permit to employ your own child in your business
  
  

You must still keep I-9s and W-4s on file

How to Set It Up Properly

1. Assign a real job title with defined duties
   
   
2. Track time like you would with any employee
   
   
3. Determine a fair hourly wage based on the role
   
   
4. Set up payroll in your business system
   
   
5. Withhold taxes (unless exempt) and issue a W-2
   
   
6. File quarterly 941s and applicable Oklahoma state returns
   
   

We help Oklahoma businesses configure payroll for family members — legally and tax-efficiently.

Can You Contribute to a Retirement Plan for Family Employees?

• Your spouse and kids can contribute to a 401(k) or SIMPLE IRA through payroll
  
  
• Your business can make matching or profit-sharing contributions
  
  
• These contributions reduce taxable income for your business
  
  
• Family members must meet your plan’s eligibility requirements

Real Oklahoma Examples

Example 1: Paying Your Teenager in a Sole Prop


You run a landscaping company. Your 16-year-old helps with invoicing and mowing.

• You pay them $6,000/year
  
  
• No FICA or FUTA required
  
  
• Your business deducts the wages
  
  
• Your child pays no federal income tax
  
  

Example 2: Paying Your Spouse in an S Corp

You own a consulting firm taxed as an S Corp. Your spouse handles client billing.

• You pay them $25,000/year
  
  
• FICA, FUTA, and withholding taxes apply
  
  
• You issue a W-2
  
  

They qualify for 401(k) and health benefits

FAQs – Paying Family Through Payroll in Oklahoma

CPA-Led Family Payroll in Oklahoma

At Boulanger CPA, we help you:

• Pay spouses, children, and other relatives legally
  
  
• Set up compliant payroll for family members
  
  
• Avoid IRS classification issues
  
  
• Build tax-saving compensation strategies
  
  
• File all payroll returns properly
  
  

Schedule a Family Payroll Strategy Call
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