Dependent Income filing Quetion

[taxman_us]

Greetings,

Thank you all for your support. A few questions on Dependent income:

> 17year old made about $1700 Earned income as summer intern (2024) and no Fed or State taxes deducted on W2. However, opened own Brokerage as turned 18 and brokerage statement show$100 dividend- which is deposit from Brokerage as account opened.

Q. Can he use Earned income per his wish (brokerage, CD) and can I fund exact Earned income for his IRA- without filing any taxes (his income or div well below IRS limits)?   OR we it is good t file taxes?

> Elder one had Intern income from 2022, 23 but never opened any IRA or filed taxes as dependent (income well below IRS limits) although few $ held for federal taxes. Now, can he open a taxable Brokerage with that money?

Thanks,

Saj

[Bsch4477]

He can invest his income as he wishes and you can fund his IRA to the extent of his earned income. 

You can’t use 2022or 2023 income for the Elder’s IRA, only 2024 income if the contribution is made by April 15.

[taxman_us]

Thank you for your reply.

He can invest his income as he wishes and you can fund his IRA to the extent of his earned income.

   : IRA to be opened by April 15th 2025? No need to file taxes. is that correct?

For Elders- Not IRA but Can I open a taxable Brokerage account to Earned income amount?

Thank you.

[AmyC]

A dependent making $1700 does not need to file a return and can have the IRA funded for the earnings amount by April 15, 2025 to be claimed for 2024 deposit.

For anyone, you can open a brokerage account. Beware that you don't pass the gift limitations and end up needing to file a gift return. Only retirement plans have earned income rules.

Reference: IRS releases tax inflation adjustments for tax year 2025

[taxman_us]

Thank you!

$1700-> Understood

For the other 'Beware that you don't pass the gift limitations and end up needing to file a gift return." : Sorry for not communicating clearly.. as elder kid has Earned income from 2022, 23 sitting bank idle, wondering he can open taxable brokerage account for self with that money so it will be put to some use (i'm not going to fund). 

[taxman_us]

Thank you!

[taxman_us]

Thank you.