Roth IRA for Minor and filing taxes

[sunnyritz]

My child who was one month short of 16 years on Dec 31, 2020 earned $370 from baby sitting jobs in 2020.  There was no other income she earned otherwise; no wages, no interest / dividends etc.

We opened a Minor ROTH IRA for her and she invested all of $370 in it for 2020.

A few Qs:

1. Does she need to file taxes?  Or not needed?  

2. If yes, does she report it as self employment income?

3. What Income tax form does she need to file and any schedules?

4. Can she file electronically given that she wasn't 16 years by 12/31/2020?

Thanks for your help.

[macuser_22]

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@sunnyritz wrote:

My child who was one month short of 16 years on Dec 31, 2020 earned $370 from baby sitting jobs in 2020.  There was no other income she earned otherwise; no wages, no interest / dividends etc.

We opened a Minor ROTH IRA for her and she invested all of $370 in it for 2020.

A few Qs:

1. Does she need to file taxes?  Or not needed?  

2. If yes, does she report it as self employment income?

3. What Income tax form does she need to file and any schedules?

4. Can she file electronically given that she wasn't 16 years by 12/31/2020?

Thanks for your help.

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The income is under the $400 filing requirement for self-employed income.  Nothing needs to be reported.

[sunnyritz14]

Thx.  While there are no taxes to be paid; how does NOT filing income tax return affect reporting of the Roth IRA investment of $370?  isn't tax filing required for this purpose?  or this is not needed to be reported?

[AnnetteB6]

Nothing is reported on a tax return for Roth IRA contributions.  So, unless the return needs to be filed for other reasons (which it does not in your case), you do not have to file a return in order to make the Roth IRA contribution for your child.  

You should keep your own records of earned income for the year and Roth IRA contributions that were made, but it does not have to be tied to a tax return for 2020.  

@summyritz14

[ssadu12]

Hello,  

I’m wondering if parents can contribute to their kids’ education or retirement plans, specifically to a Roth IRA.

The kids have not earned any income. Could you please clarify?

[Hal_Al]

Q. Can parents contribute to their kids’ education or retirement plans, specifically to a Roth IRA, if 

the kids have not earned any income. Could you please clarify?

A. Yes, to a Qualified Tuition Plan (education plan) such as a 529 plan. 

No, to a Roth IRA. An IRA contribution requires that the kid have earned income ("compensation").