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|Subject: Re: IRAs for under 18||Date: 6/3/1998 9:48 PM|
|Author: SnootFool||Number: 3564 of 75797|
<There's nothing wrong with an IRA for a minor if the child has legitimate, taxable compensation income. But money earned from parents for doing chores around the house is understood to be non-taxable. Have you ever heard of anyone paying tax on this income? Have you ever heard of the IRS attempting to collect tax on this income? If the income isn't taxable, it can't provide the basis for a contribution to an IRA. >
OK, makes sense that money from parents for chores would not count. What about babysitting, mowing lawns, painting, etc. for *other* people? Would this count? What if my 7 year old makes a killing selling lemonade on the sidewalk? IOW, how critical is the official W-2 form in all this? My impression is that most teens don't file returns on income such as this, but would typical "informal summer job" income qualify one to open an IRA if a tax return was filed?
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