Roth IRA contributions

[Guest jayglass]

I have self-employed income and employ my 15 year old daughter to help with some of the work. I pay her over $3,000 per year which I deduct from my income tax. I want to contribute $3,000 to a Roth ira for her. Do I need to issue her a W-2 in order to do this and if so, how do I go about that (paperwork, etc). Do I need to file an income tax return for her? Thanks for any input on this.

Jay Glass

[Mary Kay Foss]

If you're deducting payments to your minor daughter on your schedule C, you should be preparing Form W-2 for her. There is no social security requirement when a parent hires a minor child so that shouldn't be a deterrant.

The Roth IRA contribution is not reported on Form 1040, but a $3000 salary would be enough so that a return is required. The IRS gets reports from custodians on Roth contributions and may inquire what's up, if no return is filed by your daughter.

[Guest jayglass]

Ms. Foss,

Thanks for your help on this matter. I will file a return for her to cover this.

Jay Glass