Funding a ROTH IRA for my Parent: Tax Implications

[payreav]

I am interested in funding my mother's IRA. This account would be made under her SSN and I would be making contributions as an authorized user on her behalf. She is 50 and is still working.

My question: When it comes time for filing taxes, is there anything that needs to be done on my end or her end? I am concerned of any gift-tax related incidents and also how the account itself is filed for her taxes.

[Bsch4477]

As long as she has earned income equal or more than the IRA contribution you can use your money to fund her IRA. The amount would be less than the annual gift tax maximum so there are no tax issues. 

[dmertz · Accepted solution]

In addition to your mother needing to have sufficient compensation to support the amount of the contribution to the Roth IRA, your mother's MAGI for the purpose would also need to not exceed the amount above which some part of the contribution would become an excess contribution.  This sort of contribution essentially constitutes two independent things under the tax code, a gift from you to your mother and a contribution by your mother to her Roth IRA (no matter which of you actually makes the deposit).

As long as no part of the Roth IRA contribution is an excess contribution, there is no reporting requirement on your mother's income tax return.  As long as you have made no other gifts to your mother during the year, the maximum permissible Roth IRA contribution made as a gift to your mother in a particular year will be under the gift tax exclusion for that year and no gift tax return will need to be filed.

[Opus 17]

Only your mother can fund her IRA.  Even if you make a direct deposit, the IRS will consider that it came from her, and she must meet all the normal eligibility rules.  You gave her a gift.