My son is 15 and helps a lot on my properties. I've been paying him cash for his work. I'm thinking about 1099'ing him so he can drop some of his cash into a roth. Comments???

Also, if this turns out to be a workable idea, can he deposit more than his 1099 shows he earned?

This is the perfect opportunity to consult with a "Tax Expert" and not a clown accountant. In person or over the phone you can explain your income, business and personal details.

When I set up my business plain to include my Wife and Kids, I considered the Annual 12K gift Tax free to others, the 529 College Savings Plan, 1099 and the $600 limits.

So when the Wife went for her Masters, had a degree from UCLA, she used the kids left over college fund and went to USC Private Collage and spent over $100,000..

My kids got to go to college with the 529 plan so they did not have large college debt. Had they gotten an IRA, Roth or Standard, they could have withdrawn it with a penalty and spent it on wine, women/men and travel.

All of my family got some of my income, tax sheltered, and is going to education, retirement, personal improvement And making sue their cars are maintained (safety), no preventive maintenance over looked and they have great medical insurance.

But I got written opinions on what I should do. What you are considering for your family is wonderful.. Remind them to thank you.

I paid my kids by check, with 1099. They mowed, cleaned, and painted rentals.

I got the deduction, they could earn up to $XXXXX before paying taxes.

10% went to church, 10% went to savings, the rest went to their personal expenses like clothes, lunch money, gas...(off the family budget). They INSTANTLY stopped shopping for $200 sneakers.

As 40 something adults they are all successful and debt free other than one still has a mortgage.

And check with Dave Ramsey's website for advice on pre-paid college funding.

Son could use $500 as a downpayment on a land contract deal and use the rent to pay for college.

Our kids worked in the business (small manufacturing business and the rental business) from the time they were big enough to contribute.

We paid with cash for working in the business - just enough to minimize the chin music. Then we fully funded their Roth IRA’s. Any money above the IRA amount went into a taxable investment account.

The kids are now in their mid 30s.

One kid used the investment account to help pay for med school. The other two used the investment accounts as down payments on their houses.

They still have their Roth IRAs and have opened up their own accounts. The Roth IRA accounts are now over $250k. The kids are in their mid 30s.

Sure you can pay your son for work done. If you pay on a W-2, you don't have to collect social security until he is 18.

If you pay by 1099, he would file sch C on his tax return and can take expenses. His maximum IRA deduction would be the profit reported on Sch C. He would also need to pay social security taxes if his profit is over $400.

Oh, he is also subject to the maximum IRA deduction just like everyone else.

Tim,

Friendly tip: College is not 4 years anymore. Mine took 6 years, 5 years, and the third wanted a rebate because he did it in 4!

Special programs like Pharmacy cost an extra $5000 per year x 5 years.

I like your thinking Tim.

Brad, my oldest won a scholarship and actually made money the first year of college.

My youngest wanted out of HS so much that he graduated, with honors, in three years. He followed that path with college as well for his bachelor's degree.

After that they were on their own for additional schooling. Both continued forward with master's degrees.

Wow!!! you all did amazing job raising your kids!!!

Mine is 13, helped up a couple times with make ready, definitely will get him more involved in the future.

Not sure if you were asking me, but the answer is no. They like the idea of it but have no want, need or desire to step in.

Came close a couple times, but they both backed off. I tried to explain that you don't clean toilets the entire time but you need to learn and sometimes you get dirty when you start.

Yet another reason I do not plan to leave a legacy for them. Not that I will build up to be able to leave a lot anyhow. I gave them more than a step up to get going. They both have careers, even tho they complain a bit more than I think they should.

Thanks zero [IN]

"They like the idea of it but have no want, need or desire to step in" --- That might be the case for most of our kids.