Calimom - In another thread, I said that "when I had 3 children in diapers" -that would have been 2 months after I had a stroke (while 6 months pregnant) and had a preemie newborn, a 12 month old, and a 25-month old, who wasn't yet potty trained. I also had a 4-yr-old at that time, who was potty trained. That was almost 4 years ago.
I brought up the under-$6100 figure, because a minor doesn't need to file their own tax return if their income is below that limit. I could certainly see paying children to help in a family business and earn a small amount of their own money. BTW, the kids are now 3, 4, 6, and 8, so there's no stretch of imagination that they could help stuff envelopes, pack boxes, all sorts of things. We live on a rural homestead, and could easily create a small family business involving livestock and farming. The children DO help with the chores for these activities already, and we do give them allowances for it, so they're already doing "work" and getting "paid." My older children actually were paid to pose as models a couple of times for a family friend who built playground equipment, so they were earning 1099 income at ages 2 and 4. This isn't unusual or unethical or anything super far out.
There's simply no need to be snide, or insinuate that I'm not being ethical here.
I'm not trying to create tax scams, I am looking for best way to maximize savings. It's not at all unheard of for parents to save for a child's future, and then to later pull some or all of the funds out for other reasons. I don't see anything unethical in that at all. With a ROTH IRA the contributions are taxed first. I could see that it might be considered sketchy to make the contributions with the intent to pull them out for family use prior to the child coming of age. That's one reason I asked here.
Roth IRA money, like all other funds held by minors, would be managed by their parents. There's nothing unusual about a parent directing how a child allocates their allowance money, birthday money, lemonade stand earnings, or any other funds they might receive. So much for savings (which is, of course, directed by the parent on when and how that is eventually spent), so much for charity, so much for spending (and again, directed by the parent as to where, when, and on what that is spent).
I don't believe that there's any assertion that all funds deposited into a child's IRA were earned by the child. Simply that the child did earn some income (and that if it were more than $6100, they would have a full tax return filed for them), and that there had been contributions to an IRA in their name.
It might not be the greatest idea in the world, but I'm new to all this tax savings, hacking, churning, and everything else that is discussed here, so please give me the benefit of the doubt, and help me to see what's a good idea, what's gray territory ethically or legally, and be polite. That's why I asked it here.
MouseBandit
