And help me. I'm digging on Google, but haven't found much yet.
I want to open a Roth IRA for my kid, who earns money doing odd jobs, shoveling driveways, and such. Maybe he earns $500 this year, but it's all cash. He isn't yet 13, and has a good 50 years before he should hit this money up in retirement. 50 years of compounding interest is a great thing.
To open a Roth IRA for a minor, he must have earned taxable income. So, I get that if he earns $500 in a year, I have to report it as taxable income even though he will not owe taxes on that money, because it's so low. But, if I put in money for him that he earned last year, but haven't filed 2007 taxes yet, how do I "prove" that he has earned money and this isn't a case of daddy looking for tax shelters? Do I need to file taxes first, then open an IRA for him? Can I open an IRA, then just keep records of his income in case of an audit? If I file for him, does he have to pay unemployment, FICA, etc? Or is all of that below a minimum?
Anyone know the answers to stuff like this?
Sell the kid on the Chinese black market. Take the $500 plus whatever you get for him and spend a weekend in Vegas. Pick me up on your way.
Oh, and nice thread title too. Love the originality.
Putz.
so you're going to take your 12-year old kid's hard earned $500 and make him invest it? i would hate you as my dad.
yea really. let him buy condoms
Negative. One thing I've learned through reading this stuff is it doesn't have to be the same money earned to be invested. What this means is that Jr. can earn $500, spend $300, save $200 for whatever big ticket item he has his eyes on, and I can put $500 in the IRA for him. I get no tax benefit for that, but he gets an early start on retirement saving, plus learns how to spend and save the money he hauls in.
ok, i wouldn't hate you.
Why don't you start a corporation.
From the corporation pay your son as an independent contractor or employee...that way, he can have 'taxable income'.
id just go to the bank and sit down with someone. prob get answers and options in less than 15 minutes
Quote from: Father Demon on January 28, 2008, 03:23:22 PM
Negative. One thing I've learned through reading this stuff is it doesn't have to be the same money earned to be invested. What this means is that Jr. can earn $500, spend $300, save $200 for whatever big ticket item he has his eyes on, and I can put $500 in the IRA for him. I get no tax benefit for that, but he gets an early start on retirement saving, plus learns how to spend and save the money he hauls in.
Good plan. I hope to do the same for my kid.
I have a corporation...I get paid to my corporation and pay myself a salary from there.
I only have to pay taxes on my personal income...which is heavily offset from the interest right off from the house.....(imagine if I had kids) .
On the corporate level, you have to pay a yearly fee, at least in Cali. you do...and then, depending on what type of business the corporation is conducting...there are many things you can deduct...such as employee wages, etc., etc.
....or something like that.
So basically what you're saying is you smoke infinite amounts of cock and pay no taxes on the income you recieve for doing so. Farging beaners find loop holes in everything.
for $500 it probably won't make much difference interest income-wise at this point. Especially since he likely won't have earned income for another 2-3 years. Maybe an ING-type account. It's better simple interest than conventional banks offer, and easily liquid. Whatever you decide, make sure it's in the kid's SS#.
Quote from: hbionic on January 28, 2008, 03:30:38 PM
I have a corporation...I get paid to my corporation and pay myself a salary from there.
I only have to pay taxes on my personal income...which is heavily offset from the interest right off from the house.....(imagine if I had kids) .
On the corporate level, you have to pay a yearly fee, at least in Cali. you do...and then, depending on what type of business the corporation is conducting...there are many things you can deduct...such as employee wages, etc., etc.
....or something like that.
I can't decide whether this is money laundering or tax evasion or both.
Quote from: dis12 on January 28, 2008, 03:37:38 PM
for $500 it probably won't make much difference interest income-wise at this point. Especially since he likely won't have earned income for another 2-3 years. Maybe an ING-type account. It's better simple interest than conventional banks offer, and easily liquid. Whatever you decide, make sure it's in the kid's SS#.
I disagree with that, because what this does is allows him to take the money he earns each year and grow it over a very long time. And, when he does decide to take it out (say at age 62), the money -- all of the money -- will be tax free. Principal and growth.
Using a calculator I found online, that $500, plus an additional $500 for the next 50 years at 7% end up being almost a quarter million bucks - all tax free. Add that to whatever else he starts saving for retirement, and it's a good little kick start for him. Bump that up to 9% (the annual average return for the market is between 10 and 11% when looking long term) and $1000 a year in contributions, that's almost a cool mill. Again, all tax free.
I certainly can't leave my kids a million bucks or anything close to that, but a jump like this could make a big difference in their later years.
Farg that. Leave your kids broke and penniless along with all the debt you accumulated from living three times beyond your means. That's what I'm doing. They'll hate me for it but I'll be dead. So farg it.
So your matching his $500 to invest? Cool Dad!
Go to e-trade and open a roth. They have no annual fees on their IRA's and you can pick from a bunch of mutual funds.
http://www.bankrate.com/brm/itax/tips/20010328a.asp
Quote
However, you can't put more money than you make in any IRA. So if your income is only $1,500, then $1,500 is the most you can contribute to a Roth.
Speaking of income, you must earn money to open any IRA. That means your only income can't be from unearned sources, such as investments. You must get paid wages, a salary, tips, professional fees or bonuses.
Just gift the kid as much as you want (up to the $10,000 limit), and put it into a tax-free muni fund.
Alternately, set up something like a Giftrust account (http://www.americancentury.com/funds/fund_facts.jsp?fund=025). Yeah, it won't big as big a help at retirement time, but it might help with college, and neither one of you will have to worry about taxability, at least during the life of the fund, because they handle all the tax forms and such.
Quote from: rjs246 on January 28, 2008, 03:43:19 PM
I can't decide whether this is money laundering or tax evasion or both.
It's a legal loophole anyone that is an independent contractor should have. You'd be amazed at what you actually pay compared to those without one. It's insane. :deion :deion :deion
I don't have any financial advise for you money lover, but I will say this...whatever children I'm guilty of forcing this world upon aren't going to enjoy daddy slaving into his sixties to pay for private schools and fancy colleges.
18 and out the farging door...go live your life I know you didn't ask for it but neither did anyone else you ungrateful shteinhead.
Call your mother.
Quote from: Diomedes on January 28, 2008, 08:31:13 PM
I don't have any financial advise for you money lover, but I will say this...whatever children I'm guilty of forcing this world upon aren't going to enjoy daddy slaving into his sixties to pay for private schools and fancy colleges.
18 and out the farging door...go live your life I know you didn't ask for it but neither did anyone else you ungrateful shteinhead.
Call your mother.
It sounds like Diomedette is trying to talk you into procreating. Good luck with that.
Potential FOTY candidate
Quote from: Diomedes on January 28, 2008, 08:31:13 PM
I don't have any financial advise for you money lover, but I will say this...whatever children I'm guilty of forcing this world upon aren't going to enjoy daddy slaving into his sixties to pay for private schools and fancy colleges.
18 and out the farging door...go live your life I know you didn't ask for it but neither did anyone else you ungrateful shteinhead.
Call your mother.
Sell out
Pretty soon Judas will be synonomous with Andy
Quote from: FastFreddie on January 29, 2008, 08:18:47 AMIt sounds like Diomedette is trying to talk you into procreating. Good luck with that.
Oh, it's gonna happen.
It was pretty clear. Either marry the woman and give her children, or cut her loose.
Frankly, that's a small price to pay for her cooking alone, nevermind I happen to like the bitch, and like making her happy.
So yeah, I'm a sell out.
I now shop at Wal Mart, attend a Mega Church, vote Republican, and parade around town in my gas guzzling landscaping truck with Nationalist U.S.A. stickers on it.
Quote from: Diomedes on January 29, 2008, 07:32:57 PM
I now shop at Wal Mart, attend a Mega Church, vote Republican, and parade around town in my gas guzzling landscaping truck with Nationalist U.S.A. stickers on it.
Ha!
File under awesome customer service: Fidelity investment monster bank giant thing.
my (only, meagre) IRA is with them. I'm buying a house soon, doing some financial crap, and dealing with Fidelity a few times in the last couple days I feel compelled to tell someone that they have been nothing less than fantastic. Smart, helpful, courteous, and not overly scripted. It's like I'm talking to human beings when I contact customer service, whether it's through the telephone or the online chat.
A+++++++Would invest againQ!
I have always received impeccable service from them also.
I have no idea if their financial services are as stellar as their customer service...I just assume that since they've got the customer service section of the business down cold, they're probably pretty good at the other shtein too.
There are others that are comparable, but none that can match the level of service for the cost.