Seasonal Tax Tactics: Leveraging Family Payroll and 529 Plans

The summer months provide a unique window for business owners and parents to optimize their tax positions and educational savings strategies. For small business owners, hiring children can serve as a dual-purpose strategy: it provides a deduction for the business while potentially lowering the family's overall taxable income, provided IRS rules regarding legitimate employment are strictly followed. Second-quarter tax planning should also include a review of entity treatment and estimated payments to capture potential credits before the fiscal year progresses.

Simultaneously, summer is an ideal period to reassess 529 college savings plans. State-specific rules vary significantly; for instance, some states allow tax deductions even for contributions made to out-of-state plans. Beyond education, investors looking at real estate should evaluate 1031 exchanges and Delaware Statutory Trusts (DSTs) as methods for deferral. Finally, a five-step summer savings challenge—ranging from pausing recurring expenses to redirecting unexpected cash—can help households build a stronger financial cushion before the autumn season.