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- Stacy
If she earns more than $400 net from her self employment activities she needs to file a tax return using a schedule C.
This is also proof of earned income.
LisaThey don’t confirm it. Keep a spreadsheet and show it if you ever get audited.
Open the Roth!
ElizabethI wish I had known about Roth IRA contributions when I was a teen! Good for your daughter
CariIf she’s earning money, she should file (and pay) taxes. Easy peasy. Schedule c for her small businesses.
She probably will have to pay a bit in taxes for the income she claims…
like social security and self employment.
TonyJust keep records and file taxes for her. She won’t pay taxes, it will just be on file yearly.
That way if they ever have a problem they should of addressed it then.
But you just show your records of date and dollar amount..
MichelleIs she reporting it on her tax return?
The Roth contribution amounts are limited by earned income and how it’s reported.I suggest discussing with your own CPA before you contribute toouch or your daughter fails to make estimated tax payments if self-employed.
JoyIf over $399, she needs to file taxes and pay the self employment tax of 15%.
That will make the income earned income and then can be put into a Roth.
StevenI recommend keeping a spreadsheet. I suggest it identify date, “employer”, how much time she worked, a brief description of the task(s) completed, and the pay.
Make sure you have a reliable backup of the spreadsheet for the day the working file or the computer it’s stored on dies.
Murphy’s law would result in the IRS possibly asking for the work/pay history shortly after you lose the file due to file or storage location getting damaged.
If you store paper copies of tax returns, I’d save a paper printout of the spreadsheet with each tax return, too.
VivJust have her save her money and she can make a contribution the year she has earned income on paper (W2).
Making a few $100’s is more like hobby income.
It’s not a business, she’s not self employed.
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