tag:blogger.com,1999:blog-18436046.post6722412415068796379..comments2024-02-15T11:55:02.998-08:00Comments on Why Homeschool: I may open an IRA for my oldest daughterHenry Catehttp://www.blogger.com/profile/03097237237859928969noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-18436046.post-40262871300692441832008-05-08T11:04:00.000-07:002008-05-08T11:04:00.000-07:00Carol, thank you for the advice!Carol, thank you for the advice!Henry Catehttps://www.blogger.com/profile/03097237237859928969noreply@blogger.comtag:blogger.com,1999:blog-18436046.post-38677707293559065812008-05-04T13:10:00.000-07:002008-05-04T13:10:00.000-07:00Henry, Open a Roth IRA for your daughter. That's ...Henry, <BR/><BR/>Open a Roth IRA for your daughter. That's what I did for my 16 year old daughter. She made money giving piano lessons. Even her babysitting money counted toward the IRA contribution since it is earned income. Many times a child can have earned income yet not need to file a tax return such as working in a family business. <BR/><BR/>Also, if they owe taxes (ie income tax or self employment tax), the student should be filing tax forms anyway. It's no additional hassle. <BR/><BR/>The Roth has no tax deduction advantages, but your daughter doesn't need any tax deductions. The real advantage is the growth and tax-free withdrawals. Roth IRAs can even be used for college expenses without paying an early withdrawal penalty.<BR/><BR/>Roths and IRAs are NOT considered in the FAFSA (financial aid) calculation, so put that fear to rest.<BR/><BR/>HTH, <BR/>Carol Topp, CPA<BR/>www.CarolToppCPA.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-18436046.post-58148558109159256202008-04-23T11:26:00.000-07:002008-04-23T11:26:00.000-07:00"The hassle probably outweighs the tax savings at ..."The hassle probably outweighs the tax savings at this point..."<BR/><BR/>Thanks for the explanation. It does sound like it is worth waiting a bit.<BR/><BR/><BR/>"We tend to avoid putting large sums in the children's own names since colleges assume that they will spend most of their savigns on college but assume parents will spend a smaller percentage of their savings."<BR/><BR/>Maybe we'll have to look into ways to hide some of the money. Ugh!Henry Catehttps://www.blogger.com/profile/03097237237859928969noreply@blogger.comtag:blogger.com,1999:blog-18436046.post-52063101589040741412008-04-23T10:18:00.000-07:002008-04-23T10:18:00.000-07:00I think the main benefits of an IRA are tax advant...I think the main benefits of an IRA are tax advantages (deferment or payment at an earlier and hopefully lower rate). That and the penalties that prevent most people from taking it out until much later.<BR/>But you could probably still invest the money for long term gains. <BR/>You will also want to look at how college aid formulas are calucated. We tend to avoid putting large sums in the children's own names since colleges assume that they will spend most of their savigns on college but assume parents will spend a smaller percentage of their savings. (This method of course, hinges on being able to keep children's long term money from being spent on mom's new car or dad's new boat.)Sebastianhttps://www.blogger.com/profile/04009107720601931341noreply@blogger.comtag:blogger.com,1999:blog-18436046.post-20715074746682508782008-04-23T10:11:00.000-07:002008-04-23T10:11:00.000-07:00Your child needs to have earned income that is dec...Your child needs to have earned income that is declared to the IRS in order for her to open an IRA. That would mean paying any income and payroll tax due.<BR/><BR/>The hassle probably outweighs the tax savings at this point...Crimson Wifehttps://www.blogger.com/profile/03254830856234479999noreply@blogger.com