July 2, 2012
What parent isn’t concerned with their children’s future? And part of this concern relates to ensuring our children’s financial well-being. So, IRA’s for kids? Yes, really! The opportunity for retirement savings begins as soon as kids start to earn money, so why not begin educating them now on saving for their future?
IRA’s, whether traditional or Roth, are available to anyone, regardless of age, as soon as they have income from a job. For kids, this is anything from babysitting and lawn mowing to a position at McDonalds or within your small business. As long as the income is reported to the IRS on a W-2 and/or in the child’s tax return, the child is eligible for an IRA contribution. Even better, an unmarried dependent child’s standard deduction in 2012 shelters the first $5,950 of earned income from taxes. That means contributing to a Roth IRA is a slam dunk—offering completely tax-free growth and withdrawals for years to come. The only limitation is that kids can contribute the lesser of $5,000, the amount of their earned income for the year, or any amount up to the limitation.
Another perk of the Roth IRA is that it can be used as a vehicle for college savings, as contributions to a Roth IRA can be withdrawn penalty- and tax-free as long as the money is used for qualified college expenses; for example, tuition, books, equipment and fees. (Note: funds cannot be used for room and board.) Additionally, retirement plan assets are not included in most financial aid calculations, so if financial aid is required, IRA funds should not factor in.
For more information on how IRA’s for kids can offer tax benefits, please contact our firm. We are always here to help!
Your success is our main priority, which is why we work to identify the right blend of services for each client. With Rickhoff & Associates, you will also enjoy our personal approach to doing business. We know that every client has different goals and changing needs, so we work with you throughout the year to offer advice, review your financial status, and ensure there are no surprises at year-end. Professional, personalized, client-focused…Rickhoff & Associates is the new breed of accounting firm.
This tax season is an important one for many business owners because it’s the first that will be impacted by the Tax Cuts and Jobs Act (TCJA). How big of an impact is dependent on your unique situation. We’ve compiled this short list of provisions that may affect the business community:
According to Forbes.com, Super Bowl viewers traditionally load up on millions of pounds of less-than-healthy foods during the big game—including ribs, pulled pork, tortilla chips, nuts, popcorn and bacon—all washed down with beer (the Super Bowl beverage of choice). If you are trying to stick to your New Year’s resolution to eat better, consider a few healthy substitutes for the traditional Super Bowl eats:
The combination of running a business and your life and preparing for tax time can drive some people into a slight panic. But no need to get stressed if you are prepared. Now is the time to start organizing all documents required to file your tax return.