I have a friend that told me they did this and basically said no one would look into it and even if they did, they couldn’t prove anything.
So they opened a Roth IRA for their 7 year old who gets “paid” an allowance for chores at their house and neighbors. Since they make less than the IRS reporting amount they do not have to report the income but can max out a Roth IRA for their child.
I did a little research and found this: Q: Does my child need to file a tax return to make a Roth IRA contribution?” A: The answer is “no”. If their taxable income is below the threshold that would otherwise require them to file a tax return, they are not required to file a tax return just because a Roth IRA was funded in their name.
So theoretically he is correct right? He can open the Roth IRA and max it out and then not have to report anything because it’s under the IRS threshold since you can contribute up to 100% of earned income?
Submitted December 11, 2020 at 08:37PM by WiDirtFishing https://ift.tt/3nfEzdU
