Just finished our tax return and now it's time to start on the kid's. Since I'm in classic hypercaffienated work-avoidance mode, it's probably better to post this pondering than to waste an hour on Solitaire.
I'm suspecting that the IRS is not making it easy to figure out how to do this, but now that our kid has discarded dressage we have some budget room to fund her IRA. (Let that be a warning to other parents the next time your toddler says "Look Daddy, HORSIES!")
I understand that this should be one's lowest savings priority after home, retirement, college, infrastructure replacements, & so forth. That's already in the budget. We're not impoverishing ourselves to give our kid a higher standard of living; spouse just happens to be finding plenty of work this year and we're only pointing the discretionary spending in another direction. (I'm not putting any more money in Nortel stock.) But we're also compelled by the prospect of four or five decades of compounding power, especially when the contributions can be withdrawn without penalty for unforeseen expenses (like more college, or caring for your elderly parents).
So how does one bequeath up to $4000/year of earned income upon one's progeny? She could arguably perform up to $333.33/month of child labor on the rental property or helping with home improvement projects. Do we property managers have to issue a 1099-MISC or a W-2, or is it just included on our Schedule E and the kid's 1040? Do we pay Social Security or other payroll taxes? Is this an IRS audit red flag? Anyone doing this with their kid(s)? Is there a website, a book, or an IRS pub that we can reference? Any other lessons learned?
I'm suspecting that the IRS is not making it easy to figure out how to do this, but now that our kid has discarded dressage we have some budget room to fund her IRA. (Let that be a warning to other parents the next time your toddler says "Look Daddy, HORSIES!")
I understand that this should be one's lowest savings priority after home, retirement, college, infrastructure replacements, & so forth. That's already in the budget. We're not impoverishing ourselves to give our kid a higher standard of living; spouse just happens to be finding plenty of work this year and we're only pointing the discretionary spending in another direction. (I'm not putting any more money in Nortel stock.) But we're also compelled by the prospect of four or five decades of compounding power, especially when the contributions can be withdrawn without penalty for unforeseen expenses (like more college, or caring for your elderly parents).
So how does one bequeath up to $4000/year of earned income upon one's progeny? She could arguably perform up to $333.33/month of child labor on the rental property or helping with home improvement projects. Do we property managers have to issue a 1099-MISC or a W-2, or is it just included on our Schedule E and the kid's 1040? Do we pay Social Security or other payroll taxes? Is this an IRS audit red flag? Anyone doing this with their kid(s)? Is there a website, a book, or an IRS pub that we can reference? Any other lessons learned?