@speedway121 wrote:
My kid is 6 years old and earned some money around then neighborhood.
1) Do chores count toward the 6k max annual? Can I include those in the ROTH IRA contribution for the kid
2) Does the funding have to come from his bank account
3) Where do I report on TT that he has a ROTH IRA contribution as he is my dependent
4) DO I need to file a tax return for the kid?
There are different opinions on this.
Money from neighbors for work done is earned income and can fund an IRA.
Getting paid for "household chores" in my opinion (others might differ) is an allowance for just doing what is expected of a family member and does not meet the requirement of "taxable compensation" for work done for a profit, that the that law requires for an IRA contribution.
Roth contributions are not reported in a tax return.
Depends on how much the child earned whether a tax return is needed or not. (Working for neighbors IS self-employed income - if over $400 a tax return is required).
2020 Filing requirements for dependents.
Single dependents— (Not age 65 or older or blind)
You must file a return if any of the following apply.
1. Your unearned income was more than $1,100.
2. Your earned income was more than $12,400.
3. Your gross income was more than the larger of—
a. $1,100, or
b. Your earned income (up to $12,050) plus $350.
Or Dependent had net earnings from self-employment of at least $400.
However, if any tax was withheld, then Dependent might want to file anyway to get a refund of the tax withheld.
Also, a person that CAN be a dependent cannot claim him/her self and must check the box that says that another taxpayer can claim them (whether or not that taxpayer actually claims him/her).
Note: your state filing requirements might be different than the federal.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
