November 22, 2020

Fica Maximum 2020

Fica Maximum 2020 chapter 15 how your team can take advantage of the tax code I could not tell you how many times I've been asked this question Josh my 16 year old son has a part-time job this, summer can he open a Roth yes he can and he absolutely should a great strategy is to give him the, money to open the account based on the income he made incentivize your children to work. By opening a Roth for them for instance say he made $5,000 washing dishes over the summer but. He wants to spend some of that money can't blame him that's why he worked get some.

Spending money a way to reward him without just handing him over cash and say I'm proud of you getting that job son look at all your peers, just lounging around so for your efforts I'm gonna put the amount, you made his income into a Roth IRA and then you send a check for four thousand four five thousand dollars. To his Roth IRA provider maybe that's too much of a gift for him and doesn't incentivize him to, save any of his own money and simply match the money he puts into his Roth with your contribution say he made five thousand, dollars but only wants to put twenty five hundred into the Roth tell him you'll match his contributions dollar. For dollar up to his income limits in this case he gets 25 of his own money twenty-five hundred of his own money.

To spend as he likes he contributes 25 hundred to, his Roth and you matches so now he's got five thousand dollars in his Roth and 25 hundred yet to spend not a bad deal in the least by the way there's absolutely. Nothing wrong with doing this from the IRS perspective your son made five thousand dollars is, are an income as long as no more than, five thousand dollars goes into his Roth he's good to go your two thousand five hundred contribution it's not a taxable event either and no gift tax to pay no transfer tax. No income tax nothing he's his PI nothin report hopefully your son will continue to do this each year so by the time he graduates college. He'll. Have a nice sum of money set up as Roth have you're working children file a tax return the standard deduction of twelve thousand dollars. For those under the age of 65 is much higher than most kids earnings so no tax is.

Leave a Reply

Your email address will not be published. Required fields are marked *