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How These Tax Tips Helped Me One business owner's tax strategy is paying off.

By Steph Wagner

This story appears in the June 2015 issue of Entrepreneur. Subscribe »

Not long ago I received a text from my 16-year-old son—who works part-time at my company—that read, "Mom, can I open a Roth IRA?" I was thrilled that he was beginning to appreciate the significance that compounding interest and time would have on his retirement.

What I didn't realize was that I, too, stood to gain from my son's investments. This I learned from Kimberly C. Ford, managing partner with the accounting firm Hill & Ford in San Antonio, Texas, who specializes in tax strategies for small businesses. She says few entrepreneurs realize that the IRS allows an employed child to make annual Roth contributions of up to $5,500. Moreover, this account can be used to pay for the child's higher education (with some restrictions).

By hiring my son, I increase my payroll expense, lower my company's taxable earnings and free up disposable income (that I would have otherwise spent on his 529 college savings plan). Even better, this savings gives me the potential to put more toward my retirement and create an additional tax deduction of $5,500, since I use a traditional IRA.

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