Author Topic: How to Setup a Roth IRA for a child?  (Read 732 times)

jradams76

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How to Setup a Roth IRA for a child?
« on: March 01, 2018, 12:50:33 PM »
I have read numerous posts on how people are able to open a Roth IRA for their 5 year old because they have an earned income doing small things like working for the family business and dog walking etc...  What I'm struggling with is do you need to then fill out a 1040ez and claim the income as Misc income?  These articles never explain the whole process just the beginning part. 

I'm interested in doing this for my 9 year old which he can do lawn work for the neighbors and dog sit when they are not home or on vacation.  I was just curious on how the tax filing would work to prove that he is earning income to the IRS.  I figure he could make around 500 for the year doing things so its not a huge amount but at least its a start.

Thanks for any advice.

nereo

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Re: How to Setup a Roth IRA for a child?
« Reply #1 on: March 01, 2018, 04:03:36 PM »
I have read numerous posts on how people are able to open a Roth IRA for their 5 year old because they have an earned income doing small things like working for the family business and dog walking etc...  What I'm struggling with is do you need to then fill out a 1040ez and claim the income as Misc income?  These articles never explain the whole process just the beginning part. 

I'm interested in doing this for my 9 year old which he can do lawn work for the neighbors and dog sit when they are not home or on vacation.  I was just curious on how the tax filing would work to prove that he is earning income to the IRS.  I figure he could make around 500 for the year doing things so its not a huge amount but at least its a start.

Thanks for any advice.

yes - your child must have declared earned income in order for him (or you) to contribute money into a Roth IRA. That means filing at 1040ez on his behalf.  Make sure you are not running into child-labor restrictions, given your son is 9.

MDM

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Re: How to Setup a Roth IRA for a child?
« Reply #2 on: March 01, 2018, 04:18:43 PM »
It needs to be earned income, but it doesn't have to be declared.  I.e., if he doesn't have to file based on filing guidelines, the presence or absence of an IRA does not affect things.

But it's not wrong to file, even when not required.

See ROTH Ira for kids - Bogleheads.org for more.