Unlock Tax Benefits By Paying Your Kids: A Winning Strategy!

[fruit76loop]

I just have to share this!!!

Just got my taxes done today and my accountant was telling me another tax advantage.:balloon:

For those of you who pay your children or who are going to pay your children this year, make sure at the end of the year to make them a W2. I know you are saying what??? But if you make them a W2 they show earned income; thus, they can get a Roth IRA in THEIR name!!!

So you may be saying...so what??

Well this means that you can pay your child to stamp catalogs, make host packets, do show dishes etc. and write off the $$ you pay them AND in turn it is tax free for them and you. With a Roth IRA, after 5 years you can withdraw $$ for Education without being penalized....SO you are basically writing off your child's college education!! WHOO HOOO!

Sorry I was really excited about this and my return amount!!! Major deductions this year....started over 25K and showed a loss!!! Because of depreciation, computers (2) and desk! I know many of you are surprised I am happy at showing a loss, but I had over $5000 in depreciation & home office expenses and over $6000 in mileage! WOW! :love:

 

[jwpamp]

Marlene, I just PMd you....

 

[koima]

Yes! A Roth IRA is a fantastic idea for kids, and if you have kids who are younger and able to help, the money can sit for a number of years, growing (well, not in THIS economy, but eventually... ) for their education or for their retirement. Consider if you paid your 6 year old to stamp catalogs and help with dishes, and then all the earnings went into a Roth IRA. With 60 years to grow, what kind of kick start for a retirement will that kiddo have? I'm waiting for my kids to be old enough to legitimately help - they're 3 and 2 months. I guess I could have them model PC wear...