Author Topic: Babysitting as income for Roth for kids  (Read 895 times)

slappy

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Babysitting as income for Roth for kids
« on: July 21, 2021, 04:02:59 PM »
Is anyone aware of a resource that lists exactly what is considered income for a kid for Roth IRA contributions? It seems to be somewhat of a gray area. For example, I just read that babysitting siblings is not considered income, but babysitting cousins/neighbors is. That doesn't make sense to me. I get the concept of not paying for chores, but babysitting seems outside the realm of a chore. In my case, my son is only seven, so he would fall more under the line of "mother's helper", entertaining the sibling while the parent works. Based on the above logic, this would be acceptable if my neighbor hired him, but not if I hired him.

JJ-

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Re: Babysitting as income for Roth for kids
« Reply #1 on: July 21, 2021, 05:14:45 PM »
I think any job, mother's helpers or lawn mowing would count as employment. Typically your state has better resources for age appropriate employment activities.

However I think the line between siblings vs other families is to not complicate household income tax situation. If you pay your kid you become an employer with all the strings attached. So too avoid it you can't pay your kids for typical household employer type activities.

For resources on household employer id go to IRS. If you're looking for state guides I live in CO and I found a few resources hiring minors in colorado with a quick Google search. The second link in the results is a fact sheet that has permissible occupations. Again though I would say the typical household stuff is just not something I don't think you can pay your kids for for federal tax stuff as a household, but other people can pay your kids.
« Last Edit: July 21, 2021, 05:25:43 PM by JJ- »

slappy

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Re: Babysitting as income for Roth for kids
« Reply #2 on: July 21, 2021, 05:24:14 PM »

However I think the line between siblings vs other families is to not complicate household income tax situation. If you pay your kid you become an employer with all the strings attached. So too avoid it you can't pay your kids for typical household employer type activities.


Maybe this is the part that I'm missing.

HamsterStache

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ender

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Re: Babysitting as income for Roth for kids
« Reply #4 on: September 26, 2021, 09:57:46 AM »
The FICA tax hit on self employment income kinda makes this a bit worse.

I wonder what % of babysitting income is correctly reported to the IRS ;-)