How It Works Here's how employing your own child works. Say you have a 10- year-old who can do some light office work, which could include anything from computer maintenance to filing chores. You pay your child up to $4,850 per year for ``jobs related to their age or abilities,'' Podnos says. A child in your employment can also contribute $4,000 annually to his own Individual Retirement Account (IRA) -- and use it for college funds. ``The first $4,850 the child earns is tax free to them (the standard deduction for singles). This money can be used to fund a trust account, Coverdell or 529 plan,'' Podnos says. Wages can be put into any college investment vehicle, although trust funds like Uniform Gift to Minor Act accounts may jeopardize financial assistance if your family is likely to qualify for aid. When your child works for you, though, one of the initial assumptions may be that he won't qualify for aid, then the trust route isn't a problem. Funding Vehicles State-sponsored 529 plans are also a worthy receptacle for college funds, just be careful when selecting them. They tend to be expensive; most are sold through commissioned brokers and limited in fund choices. There are more than 100 such plans, with each state varying in expenses and available tax breaks. If you don't own a business or intend to start one, you can still gift up to $2,000 annually per child in a Coverdell Educational Savings Account (for joint filers with adjusted income under $220,000) and fund your own Roth IRA -- up to $4,500 per year if you are over 50 and your adjusted joint income is under $160,000 annually. Since your child is likely to be in the lowest tax brackets when in college, he can benefit from the four major tax breaks. The only way these write-offs benefit your child, though, is if he is what Podnos calls ``emancipated,'' that is, he isn't declared a dependent on your tax return the years in which he takes the breaks. Podnos says the benefits of this plan more than offset the loss of the child exemption.