Roth IRA without proof of income?

Party A should be happy, more than happy, to offer B a 1099. This document's A's expense and tax deduction. B can start a Roth with up to the amount of earned income for the year. The interest income is below B's kiddie tax threshold, so it doesn't produce a tax due, nor is it 'earned income' to deposit to the Roth.

On a side note, it's typical for kids to earn money babysitting or doing yardwork for neighbors. This income is tougher to document as these folk aren't likely to offer 1099s. This child needs to keep contemporaneous records showing date, time worked, money received, and who paid. That will get him his Roth.

If a 1099-MISC is issued then SE tax is due. If you made $400 or more then you must file Schedule SE, though I think there is a limited exception for minors. Now I doubt that kids who babysit and such report their income. But if they did they could contribute towards an IRA, but then again they will pay 15.3% tax on the earnings. So the question is it worth it to pay the extra tax in order to get an IRA.

suggests otherwise. The sitter is not self-employed, but a household employee, no tax, nor SE is due,

A 1099-MISC for payments to a babysitter is wrong on a couple of fronts. First, the 1099-MISC is not to be issued for personal expenses. Second, babysitting in the child's home is a textbook employer/employee, not independent contractor, relationship. If any document is in order it's a W-2. Household wages for a worker under 18 are exempt from SS/Medicare tax. See Pub 936.

The wages can be reported on line 7 of the 1040 without a W-2. See the 1040 instructions.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Party A is a home music teacher and officer in a local area music teachers association. Party A pays Party B (age 12 years) in cash for doing various office-type activities such as handling registrations, answering phones, setting schedules, etc. Party A includes this $$ as an office expense on her income tax. Party B has a total income of about $500 a year from this work. Party B also has a small bank account with about $100 total interest for the year.

Can Party A set up a Roth IRA (custodial account) up to $500 for Party B without any specific receipts or time sheets showing the amount of money received by Party B? ============ Setting up an IRA (of any type) does not require income. Making a contribution to the IRA does require earned income.

The problem may be the taxpayer's age (party B). An IRA requires the legal ability to enter into a contract, and a minor can't do that. Such is not a tax issue but a matter at law.

First point - pedantic, but true. Although, a broker tends to ask why an account is getting set up with no assets or transfer of asset form.

Second - That may be, which is why a custodial IRA is available.

"JoeTaxpayer Cust for Jane 2.0 Taxpayer Cust Roth Cont IRA, Charles Schwab & Co inc Cust"

is the titling for my J2's account.

of course a minor can enter into a contract. The question is the enforceability of the contract against the minor, due to the minor's likely ability to invalidate and void the contract.

of course a minor can enter into a contract. The question is the enforceability of the contract against the minor, due to the minor's likely ability to invalidate and void the contract. ================== An unenforceable contract is void on its face. In my state, contracts with minors are unenforceable.

They are enforceable by the minor.

A contract may be voidable, but that does not mean that it is void. There is a difference.

___ Stu