Answering the question:

“HOW can I open a Roth for my child since Roth contributions are supposed to from earned income”

If you follow these simple steps you can set your kids up for success and I don’t mean 20,000

Imagine giving them almost 300 MILLION DOLLARS?!

Background: IRS says that Roth IRA contributions have to be from EARNED INCOME

Obvi 10 year old Jonny doesn’t have a job.

So how can Jonny get a IRA?

This goes back to the TAXES podcast and all of the benefits of LLC
(Link will be below)

HIRE THEM ONTO YOUR LLC as part time...

(Allowance or gifted doesn’t count)

You can deduct your child wages as a business expense, which lowers both your fed income and self-employment tax bills And your state income tax bill too.

If the kid is under 18,

her wages are exempt from Social Security, Medicare and Federal Unemployment taxes

The IRS Says that child can contribute the smaller value of either

Earned income or 6,000

If they make $10,000 you can contribute 6,000

If they make $3,000 you can contribute

Simple answer

Make them a employee (do not forget W-2)

Give earned income of $5,000 then direct contribution to ROTH

& remember if you don’t know the advantages of a ROTH we did a whole EP yes it’s a retirement account but saves SO much $$ and has withdraw exceptions (school 1st house)

Now the fun stuff

What will this do for them ??

If your child is 10
By contributing $5,000 per year
And getting them a modest return (20%)

You can set them up with $300 MILLION

If you do something crazy like 40% return....

Little Jonny could have

$343,567,571,865 LOL

LINKS TO PODCAST

TAXES (talks about LLC)

https://podcasts.apple.com/us/podcast/pennies-going-in-raw/id1523255162?i=1000503019226

ROTH IRA

https://podcasts.apple.com/us/podcast/pennies-going-in-raw/id1523255162?i=1000488311475