Aug 16, 2026
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Add us on GoogleA certain calm comes over you anytime you figure out a puzzle. This business owner, a guest on Caleb Hammer’s Financial Audit, seems to have that calm in abundance. Only he’s not completely right to have it.
The guest told the financial guru that he hasn’t filed his taxes in four years, and believes he has cracked the code to avoid paying the Internal Revenue Service by making his kids employees. His 9-year-old son cuts grass. His 13-year-old daughter cuts grass. And his two youngest children, he says, can model for his advertising.
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Each one, he says, can be paid up to $15,000 a year — tax free for them, while providing him with tax deductibles for his business. When Hammer says the IRS could come for his house, he waves it away: “They could, but they won’t,” he said.
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Would it survive an audit? “Yeah, 100%,” he said. When asked if a certified public accountant signed off on it, he said “Yes.”
Most of what the Financial Audit guest describes is a real tax strategy. Parents are allowed to hire their children and gain tax advantages. Never filing those taxes, however, could make matters difficult for him, as shown by current tax law and a Supreme Court ruling from 1985 that explains why he can’t necessarily pass blame to his CPA.
What he’s actually right about
Putting your children on the payroll is a genuine move, assuming the work is deemed necessary, age appropriate and payment is in line with the going market rate.
The U.S. Department of Labor DOL lets parents employ their own children under 16, any number of hours, in a business they wholly own — provided it’s not manufacturing, mining or a job declared hazardous.
The IRS says payments for the services of a child under 18 aren’t subject to Social Security and Medicare taxes if the business is a sole proprietorship, or a partnership where each partner is also the child’s parent. Those savings, however, would disappear if the business is a corporation, or a partnership with anyone in it who isn’t the child’s parent.
His usage of “tax free” when it comes to his children’s wages is also correct. A salary of up to $15,000 for his children is under the 2026 standard deduction of $16,100 for a single filer, meaning they would not owe federal income tax on their earnings. However, withholding still comes out of a child’s paycheck, and they only get it back by filing their tax return.
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Where his argument falls apart
The guest claims he gets deductions for hiring his children as employees. However, a deduction only counts when you claim it on a return and file it.
The IRS can potentially create a substitute for return for him — using the income it already knows about, and it may not credit him with the deductions he’s been counting on to lower his tax bill. Depending on whether he’s able to pay that bill, it could lead to a levy or a lien.
The IRS also charges more for not filing than for not paying. Skipping your return altogether costs 5% of what you owe each month. By comparison, skipping payment costs 0.5% of what you owe monthly in fees.
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He’s right that the IRS can’t just take a primary home the way it can garnish wages from a bank account; it has to get a federal judge to sign off first. That makes it rare, but it doesn’t mean “they won’t” try.
Why “my CPA signed off” doesn’t rescue him from the IRS
You may think that once a CPA takes over your taxes, the responsibility shifts to them. But someone already took that argument all the way to the Supreme Court, and lost.
Robert Boyle was handling his mother’s estate back in 1979. He hired a lawyer, gave him every record and kept checking in throughout the spring and summer. The lawyer just forgot to put the tax deadline on his calendar. The return was submitted three months late, and the IRS billed the estate $17,124.45 for it.
All nine Supreme Court justices ruled against him, arguing that relying on a lawyer is common, but it “cannot function as a substitute for compliance with an unambiguous statute,” Chief Justice Warren Burger wrote.
In other words, the deadline to file taxes (generally April 15) was Boyle’s, and hiring someone didn’t change that. The IRS says the same thing, and tells people to “get proof that your return or payment is sent on time.”
The Court left one opening, however, If an accountant tells you no return is required at all, you’re allowed to believe them — that’s a legal judgment. But presumably, that’s what this scenario is. The guest’s CPA looked at a deduction, which is advice about filling in a return, not sending one.
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Godwin Oluponmile is a content specialist, SEO strategist and copywriter with seven years of expertise in finance, Web 3.0, B2B SaaS and technology. His work has been featured in publications such as Entrepreneur, HackerNoon, Blocktelegraph and Benzinga.
