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tait4aft
Returning Member

Is there any Tax benefit to Roth payment to grandchildren account? If so how to process to in Turbo Tax?

 
3 Replies
xmasbaby0
Level 15

Is there any Tax benefit to Roth payment to grandchildren account? If so how to process to in Turbo Tax?

Please explain what you are trying to do in more detail.   Are you taking money out of your own Roth account to gift to your grandchildren?  There is no deduction for gifts to your grandchildren, although it is very generous for you to do so.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Opus 17
Level 15

Is there any Tax benefit to Roth payment to grandchildren account? If so how to process to in Turbo Tax?

You can't contribute to someone else's IRA.  It's an individual account, belonging only to the one owner.

 

You could give money to your grandchildren that they put in a Roth IRA.  But the maximum contribution is $6000 or their income earned from working, whichever is less.    So this won't be an option for young children.  If you have an older grandchild with a job, you can support them by giving them money to put in a Roth IRA.  However, it will be their money, and they could withdraw it at any time for any good or foolish reason. 

 

If you give money to your grandchildren, it is not reported in any way on your tax return.

 

If you want to help your grandchildren invest but you still want to retain some financial control to keep them from spending it all on stupid stuff, you should talk to a financial advisor about the uniform gift to minors act and various kinds of trust accounts that are available for this purpose.  

 

On the other hand, if you are talking about withdrawing money from your own Roth IRA and giving it to someone, that's certainly allowed.  Roth IRAs are not taxable if you are over age 59-1/2, and the IRS does not care what you do with the money after you withdraw it.  However again, if you want to make large gifts to your grandchildren, you might want to think about the UGMA and trust accounts. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
ThomasM125
Expert Alumni

Is there any Tax benefit to Roth payment to grandchildren account? If so how to process to in Turbo Tax?

There wouldn't be any tax benefit to you to  contribute to your grandchildren's ROTH IRA account. They would benefit as the income would grow tax-free. They would need earned income to qualify for a contribution though.

 

They would have to file a tax return and enter the contribution on their tax return.

@tait4aft 

[Edited 4/7/22 at 4:19 PM PST]

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