kalanamak Posted November 23, 2012 Share Posted November 23, 2012 I'm wondering what age children start filing income tax? Anyone have teens work for you (the parent), get paid, and file tax returns. I'm thinking along the lines of starting an IRA. You can only put in what you earn. This is years ahead for us, but I'm wondering if anyone does this. Thanks for any info. Quote Link to comment Share on other sites More sharing options...
nmoira Posted November 23, 2012 Share Posted November 23, 2012 Not yet, but we'd like them to start contributing to a Roth IRA as soon as they're able.Even relatively small contributions at a young age can make a big difference. Quote Link to comment Share on other sites More sharing options...
Pawz4me Posted November 23, 2012 Share Posted November 23, 2012 I'd research it carefully, assuming you plan on your kids attending college. Any money in the child's name is considered to be almost 100% available for covering college costs and can really hurt in the amount of aid offered. Quote Link to comment Share on other sites More sharing options...
LMA Posted November 23, 2012 Share Posted November 23, 2012 http://www.irs.gov/publications/p929/ar02.html Quote Link to comment Share on other sites More sharing options...
nmoira Posted November 23, 2012 Share Posted November 23, 2012 I'd research it carefully, assuming you plan on your kids attending college. Any money in the child's name is considered to be almost 100% available for covering college costs and can really hurt in the amount of aid offered. Not IRAs. However, withdrawing money from an IRA can complicate things for the following year because the withdrawal would be counted as income. Quote Link to comment Share on other sites More sharing options...
Pawz4me Posted November 23, 2012 Share Posted November 23, 2012 Not IRAs. However, withdrawing money from an IRA can complicate things for the following year because the withdrawal would be counted as income. A parent's Roth IRA can be tapped for a child's college expenses. So I wouldn't assume that a Roth in the child's name would not also be considered available money. As I said, it's something I'd want to research thoroughly. Here is a quote from one article I found with a quick search: The surprise for many parents, however, is the potential financial-aid penalty: The entire IRA distribution, taxable or not, must be included in base-year income on the student's federal financial-aid application for the following year. This can dramatically reduce a need-based aid package. Full article. Quote Link to comment Share on other sites More sharing options...
kalanamak Posted November 23, 2012 Author Share Posted November 23, 2012 Not IRAs. That's what I thought. Besides, I assume NO outside help for college unless he has the brains and wherewithal for a non-need award. Quote Link to comment Share on other sites More sharing options...
kalanamak Posted November 23, 2012 Author Share Posted November 23, 2012 Arg, the Double Devil. Quote Link to comment Share on other sites More sharing options...
nmoira Posted November 23, 2012 Share Posted November 23, 2012 A parent's Roth IRA can be tapped for a child's college expenses. So I wouldn't assume that a Roth in the child's name would not also be considered available money. As I said, it's something I'd want to research thoroughly. Can be tapped without penalty, yes, but funds in an IRA are not (at present) counted towards assets in determining financial aid eligibility. Quote Link to comment Share on other sites More sharing options...
kalanamak Posted November 23, 2012 Author Share Posted November 23, 2012 A parent's Roth IRA can be tapped for a child's college expenses. So I wouldn't assume that a Roth in the child's name would not also be considered available money. As I said, it's something I'd want to research thoroughly. REally? (Not that it matters to me, but a quick google: http://www.kiplinger.com/columns/ask/archive/how-roth-iras-affect-financial-aid-eligibility.html says it doesn't. Is Kiplinger's not reliable??) Quote Link to comment Share on other sites More sharing options...
Pawz4me Posted November 23, 2012 Share Posted November 23, 2012 Hmm . . . maybe what both articles are saying that any money withdrawn from a Roth could impact aid eligibility? I don't know. What we're finding--and we're just starting the college search and doing some of the various cost calculators--is that it's very confusing. The private schools (which our son is primarily interested in) look at things that aren't considered on FAFSA. Barring DH losing his job, our kids won't qualify for need-based aid from state schools. But we haven't wanted to do anything to hurt whatever aid they might possibly qualify for from private schools. So again, it's just something I'd recommend researching carefully. Quote Link to comment Share on other sites More sharing options...
nmoira Posted November 23, 2012 Share Posted November 23, 2012 Hmm . . . maybe what both articles are saying that any money withdrawn from a Roth could impact aid eligibility? I don't know. Any money withdrawn counts as income for the next year's aid application. Money *in* an IRA (student or parent) is not counted as an asset. Quote Link to comment Share on other sites More sharing options...
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