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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79106  
Subject: Re: IRA for 13 yr. old Date: 8/8/1999 10:20 AM
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In order to have an IRA, you have to have income
reported on W-2. Babysitting money won't do it.

The only mutual fund I know of that does IRA's for
children is American funds. You must see a broker to
get them.

You do need earned income. I think the IRS would tax the babysitting money if it new about it (and it will now know). Could have a self employment tax problem since the earnings are over 400. I think this si form SE and filed with the 1040. Also mayhave some tax implications with parents returns. What a complicated tax system we have.

My wife had a serious operation and I paid one of my daughters under $1,000 (Under 1,000 avoids the need to file W2 and pay social security taxes) and then contributed the earnings to an IRA with no problem. I did explain on my tax return why there was no W2 attached.

I would go with the IRA. I think it is worth it in the long run.
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