Assuming it's for household chores, under 12,400 a year and paid in cash?
You'll need to sign in or create an account to connect with an expert.
You can't pay your kids for doing household chores and call it "compensation"/earned income for purposes of contributing to an IRA (Traditional or Roth).
You are probably mixing up one of the other situations.
1. If your family has a business, you can employ your children, in that business, and they can make IRA contributions, Kids under 18 are also exempt from FICA (social security and medicare) tax for wages from the family business.
2. If you child works as a household employee (or as a "business"), for other people (e.g. baby sitting and lawn mowing), not just family, that income can be eligible for IRA contributions.
Reference: https://www.investopedia.com/articles/personal-finance/110713/benefits-starting-ira-your-child.asp#:....
Q. : Do kids or parents need to pay taxes or report for custodial roth ira's (assuming your child does qualify to have a Roth IRA)?
A. The kid. But, most likely, no reporting will be needed. Roth contributions are not reported on a tax return (there is no deduction). The IRA financial institution will issue a form 5498. If a distribution is taxable, the kid will have to file a tax return if needed.
You mean to contribute to a ROTH IRA for them? Well they need to have earned income to qualify to make a IRA contribution. So you would need to give them a W2 or they would have to file a return as self employment income. It doesn’t matter where the money come from to fund the contribution.
See IRS Pub 590-A IRA Contributions
there are different rules for kids doing household chores for their parents. i am 99.9% sure. assuming its under 12,400 and it's paid in cash.
You can't pay your kids for doing household chores and call it "compensation"/earned income for purposes of contributing to an IRA (Traditional or Roth).
You are probably mixing up one of the other situations.
1. If your family has a business, you can employ your children, in that business, and they can make IRA contributions, Kids under 18 are also exempt from FICA (social security and medicare) tax for wages from the family business.
2. If you child works as a household employee (or as a "business"), for other people (e.g. baby sitting and lawn mowing), not just family, that income can be eligible for IRA contributions.
Reference: https://www.investopedia.com/articles/personal-finance/110713/benefits-starting-ira-your-child.asp#:....
Q. : Do kids or parents need to pay taxes or report for custodial roth ira's (assuming your child does qualify to have a Roth IRA)?
A. The kid. But, most likely, no reporting will be needed. Roth contributions are not reported on a tax return (there is no deduction). The IRA financial institution will issue a form 5498. If a distribution is taxable, the kid will have to file a tax return if needed.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
ggreg
New Member
ggreg
New Member
m-4444
Returning Member
jmb515
Returning Member
syoung123
Level 5