I have opened Roth IRA accounts for both of my daughters because I was worried about their ability to save sensibly (with all the correct qualifications). They know they’re contributing to an account monthly (less than $500 a year), but I have been managing it. They know nothing else. Is there anything that needs to be reported on their taxes, as they will be filing them not knowing what they’ve contributing to? I’m just trying to keep the accounts away from them so they won’t know and spend it.
Roth IRA contributions do not have to be reported on individual income tax returns. There are two limits to be careful of, though.
For 2017, the maximum permitted to be contributed to an IRA (Roth or traditional) is a total of $5,500, or $6,500 if 50 or older.
Secondly, again for 2017, you are only permitted to make Roth IRA contributions if your adjusted gross income is $186,000 or less for joint filers and $118,000 or less for individual filers. If income is above these limits, you will have to have part of or all of the Roth IRA contribution refunded or transferred to a traditional IRA.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.
Answered by: Paul K. Rudoy, CPA, PFS, is managing partner of H2R CPA in Pittsburgh, Pa.