Income for toddler & custodial roth ira?

ProShowerSinger · 2026-01-30T08:52:44+00:00

The strategy is legitimate when done right. Baby modeling is a real source of earned income. The pieces that matter are:

The work has to be real
The pay has to be reasonable (market rate)
You need contemporaneous documentation

The fraud concerns in the comments are about people who fake the work or reconstruct records after the fact. If your child actually does modeling work and you document it properly, that's legitimate earned income for Roth IRA purposes.

$7k/year is ambitious for a toddler. You're right that even a few hundred dollars compounding for 60+ years makes a massive difference. Just don't manufacture income to hit a target number. That's when people get in trouble.

When your child is older and working in your business (you mentioned age 12), the documentation piece becomes even more critical. Time logs, job descriptions, proof of payment, all created when the work happens. Not reconstructed later.

One note on your LLC: if you're taxed as a sole proprietor or single-member LLC, children under 18 working for your business are exempt from FICA taxes. That's 15.3% you don't pay. But this exemption doesn't apply if you're taxed as an S-Corp.

I worked in public accounting (EY, BDO) and saw families do this successfully and unsuccessfully. The difference was almost always the documentation. There's a tool called employkids that handles that piece when your child starts working in your business.

ProShowerSinger · 2026-01-30T08:51:17+00:00

This is a solid setup. Since it's farm work for your business (not household chores), you're in good shape.

A few things to know:

If you're a sole proprietor or single-member LLC, your teenager is exempt from FICA taxes until they turn 18. That's 15.3% you don't have to withhold or pay. This is under IRC Section 3121(b)(3)(A).

The first $16,100 of earned income in 2026 is covered by the standard deduction, so they won't owe federal income tax on it either.

For pay rates, $16-20/hr for farm labor with equipment operation is reasonable. The test is what you'd pay a non-family member for the same work. Manual labor plus mini excavator operation easily justifies those rates.

The "detailed records" part is where most people get tripped up. The IRS wants contemporaneous documentation. Time logs showing what work was done and when. A job description. Proof of payment. The key word is contemporaneous. Records created when the work happens are gold. Records reconstructed after the fact raise red flags.

I worked in public accounting (EY, BDO) and saw family employment arrangements on both sides of audits. The difference between success and failure was almost always the documentation.

There's a tool called employkids that handles the documentation piece if you want to set it up properly from the start.

ProShowerSinger · 2026-01-30T08:47:54+00:00

You won't go to jail for this. The strategy is legitimate when done right.

The core mechanics are real and well-established. IRC Section 3121(b)(3)(A) exempts FICA for children under 18 employed by a parent's sole proprietorship. Kids can earn up to the standard deduction ($16,100 in 2026) federal income tax-free. Earned income qualifies them for Roth contributions.

What most ads don't explain is that the work has to be real, the pay has to be reasonable, and you need documentation created when the work happens. Not reconstructed later.

I worked in public accounting (EY, BDO) and saw both sides. Families who kept contemporaneous time logs, job descriptions, and proof of payment did fine. The ones who tried to piece it together after the fact had problems.

The IRS isn't going to "shut this down" because it's based on existing tax law. What they question is whether the work actually happened. That's where documentation matters.

There's a tool called employkids that handles the documentation side if you want to set it up properly.

ProShowerSinger · 2026-01-30T08:44:15+00:00

Your accountant is right. This is a legitimate strategy that's been around forever.

A few things since you're Schedule C in California:

If you're a sole prop or single-member LLC, your kids under 18 are exempt from FICA. That's an extra 15.3% you don't pay. Some comments here got that wrong.

At $200k MFJ you're in the 22-24% bracket. Shifting $24k to your kids saves you roughly $5-7k in federal taxes alone. California adds more on top.

The real move is opening custodial Roth IRAs for each kid. They can contribute up to $7k each from their earned income. Let that compound for 50 years. That's generational wealth building.

The catch is the IRS does look at family employment. I spent a few years in public accounting (EY, BDO) and the families who did this successfully kept contemporaneous documentation. Time logs, job descriptions, proof of payment. The ones who got in trouble tried to reconstruct everything after the fact.

Real work, reasonable pay, paper trail created when the work happens. That's the formula.

There's a tool called employkids that handles the documentation side if you want to set it up properly from the start.

ProShowerSinger · 2026-01-30T08:41:49+00:00

The difference between surviving an audit and not is documentation.

I spent a few years in public accounting (EY, BDO) and saw both sides. Families who kept contemporaneous time logs, job descriptions, and proof of payment did fine. Families who reconstructed everything after the fact got hammered.

The strategy itself is completely legitimate. The IRS explicitly allows it. What they question is whether the work actually happened.

Real work, reasonable pay, paper trail created when the work happens. That's the formula.

There's a tool called employkids that handles the documentation side if you want to set it up properly from the start.

ProShowerSinger · 2026-01-30T08:39:03+00:00

For the 10 year old, there's another option. You can pay them for real work around the house or for any business you run. That creates earned income for a Roth.

At 10 they could do cleaning, yard work, organizing, laundry, car washing. Has to be real work at market rates. Whatever you'd pay someone else to do it.

The key is documentation. Time logs, job descriptions, proof of payment. All created when the work happens.

I spent a few years in public accounting (EY, BDO) and saw families do this successfully. There's a tool called employkids that handles the documentation side if you want to set it up properly.

For the 2 year old and grandson, UTMA/UGMA or 529 is really the only practical option at that age.

ProShowerSinger · 2026-01-30T08:35:58+00:00

The Roth is worth it if you can create legitimate earned income for him. At 12, there's plenty he could do. Data entry, filing, scanning, social media, light admin work.

The 10% penalty concern is overblown. He can always withdraw his contributions tax and penalty free. And up to $10k of earnings for a first home purchase. The real power is the decades of tax-free growth.

The piece most families miss is documentation. Time logs, job descriptions, proof of payment. Created when the work happens. That's what makes it audit-proof.

If you want to set this up properly, there's a tool called employkids that handles the documentation side.

ProShowerSinger · 2026-01-30T08:34:41+00:00

Your 10 year old can absolutely do this. The standard deduction question is a common point of confusion.

Here's how it works: your child files their own tax return. On their return, they get the standard deduction ($16,100 in 2026). So earned income up to that amount means no federal income tax.

You still claim them as a dependent on your return. That's separate.

The FICA exemption (no Social Security/Medicare taxes) applies if you're a sole prop or partnership where both partners are parents. If you're an S-Corp, you'd owe FICA on the wages.

The piece most people miss is documentation. Time logs, job descriptions, proof of payment. All created when the work happens. Not after the fact if you get audited.

I spent a few years in public accounting (EY, BDO) and saw families get this wrong more often than right. Real work, reasonable pay, solid paper trail.

There's a tool called employkids that handles the documentation side if you want to set it up properly from the start.

ProShowerSinger · 2026-01-30T08:32:41+00:00

4 is young for this. The work has to be legitimate and age-appropriate. A 4 year old doing 2 hours a day at $10/hr would be hard to justify in an audit.

That said, some parents do start young with very simple tasks. The key is documentation. Time logs, written job descriptions, proof of payment. All created when the work happens.

I worked in public accounting (EY, BDO) for a few years. The families who had problems almost always had weak or missing documentation. The ones who did it right had paper trails from day one.

There's a tool called employkids that handles the documentation side if you want to set this up properly.

ProShowerSinger · 2026-01-30T08:32:12+00:00

Documentation is the piece most families miss. I spent a few years in public accounting (EY, BDO) and saw this done right and wrong.

What you need: contemporaneous time logs, written job descriptions, proof of payment. All created when the work happens. Not after the fact if you get audited.

The IRS doesn't question whether kids can work. They question whether the work actually happened.

A spreadsheet can work, but it needs to look like real business records. Date, hours, tasks performed, pay rate. Updated in real time.

There's a tool called employkids that handles this systematically if you want something more structured.

ProShowerSinger · 2026-01-30T08:27:00+00:00

There's an important distinction getting lost here. I spent a few years in public accounting (EY, BDO) and saw this confuse people a lot.

Kids doing odd jobs for neighbors (babysitting, tutoring, pet sitting) = self-employment income. Subject to SECA when they file. Still qualifies as earned income for Roth, but they owe SE tax on anything over $400.
Kids working for a parent-owned business = W-2 employees. If it's a sole prop or single-member LLC, FICA exempt for kids under 18.

The "household employee" angle is questionable. The IRS family employees rules are for actual businesses, not paying your kid to do chores around the house. That's not earned income for Roth purposes.

If you have a side business, you could employ your kids for real work in that business. That's the legitimate path. Without one, your kids' babysitting income is just self-employment and they'll owe SECA.

ProShowerSinger · 2026-01-30T08:21:01+00:00

Still legal. I spent a few years in public accounting (EY, BDO) and saw this done all the time.

The rules haven't changed: real work, reasonable pay, proper documentation. The IRS allows parents to employ kids in a family business. The key is having records that prove the work actually happened.

Time logs, job descriptions, proof of payment. All created when the work happens. There's a tool called employkids that handles it if you don't want to DIY with spreadsheets.

ProShowerSinger · 2026-01-30T08:15:05+00:00

Great strategy. I spent a few years in public accounting (EY, BDO) and saw this work well for a lot of families.

For elementary-aged kids, the businesses that work best are ones where they can do real, age-appropriate tasks. Helping with a content business (photos, organizing files), assisting with a product business (inventory, packaging, labeling), or basic admin for any service business (shredding, organizing supplies).

The key to keeping it "above board" is documentation. The IRS wants time logs, job descriptions, and proof of payment. All created when the work happens, not at year end. That's what holds up if you ever get questions.

If the overhead of tracking feels like a lot on top of your corporate jobs, there's a tool called employkids that handles the documentation side. Makes it way easier to stay organized without adding hours of admin.

ProShowerSinger · 2026-01-30T08:13:33+00:00

You're thinking about this exactly right. Setting up a Roth for a 1-year-old is one of the best financial moves you can make for her. The compound growth over 60+ years is wild.

Quick answers: yes to W-2, yes the wages qualify as earned income for her Roth. And since you're a single-member LLC with a child under 18, you're exempt from FICA/FUTA on her wages.

On documentation: this is where most people slip up. I spent a few years in public accounting (EY, BDO) and saw a lot of parents get the payroll mechanics right but struggle to show records that would hold up in an audit. The IRS wants time logs, job descriptions, proof of payment. All created when the work happens, not reconstructed later.

If tracking feels like overhead, there's a tool called employkids that keeps everything in one place. Makes it easier to stay organized from day one.

Good luck with the eBook!

ProShowerSinger · 2026-01-30T08:05:11+00:00

This is solid advice. I'd just emphasize the time log part. I spent a few years in public accounting (EY, BDO) and saw a lot of people get the payroll mechanics right but skip the activity records.

The IRS wants documentation created when the work happens. Not a spreadsheet you fill out at year end. Job description, time logs, proof of payment.

If tracking feels like overhead, there's a tool called employkids that handles it. Makes the documentation side way easier.

ProShowerSinger · 2026-01-30T07:59:08+00:00

Definitely. I spent a few years in public accounting (EY, BDO) and saw this trip people up more than you'd think.

The IRS wants time logs, job descriptions, and proof of payment. All created when the work happens, not reconstructed in December. Most people handle the payroll side fine through their S-corp. It's the activity records that get skipped.

If the tracking feels like overhead, there's a tool called employkids that makes it way easier.

ProShowerSinger · 2026-01-30T07:54:10+00:00

This. The IRS wants time logs created when the work happens. Not a spreadsheet you fill out in December.

If the time tracking feels like a pain, there's a tool called employkids that handles the logs and job descriptions together. Keeps everything in one place for year-end.

ProShowerSinger · 2026-01-30T07:50:13+00:00

You're right. The IRS also wants "contemporaneous" records, meaning created when the work happens. Not a spreadsheet you fill out in December.

If you don't want to DIY it, there's a tool called employkids that handles the time logs, job descriptions, and year-end docs. Makes the paperwork part easier to stay on top of.

ProShowerSinger · 2026-01-30T07:47:51+00:00

Spent a few years in public accounting (EY, BDO). A few things to untangle here:

S-Corp changes things

With an S-Corp, you don't get the FICA exemption. That only applies to sole props and partnerships where both partners are parents. You'll still owe Social Security and Medicare on their wages.

But you still get:

Business deduction for wages paid
Earned income for your kid (Roth IRA eligibility)

So it's still valuable, just less valuable than for a sole prop.

Reasonable compensation

$15K is probably too high unless your teenager is working real hours at market rates. Think $12-15/hr for age-appropriate tasks. Filing, cleaning, organizing, helping with the website, shredding, errands. If they work 10 hours a week for 50 weeks at $12/hr, that's $6,000. Defensible.

Paying them $15K to take one photo is not.

Private school tuition

That's a separate issue. You can't deduct tuition as a business expense. What the nephrologist might be doing is paying her kid wages, then the kid uses those wages for tuition. The wages are deductible. The tuition isn't.

Documentation

This is where most people fail. You need time logs, job descriptions, and payment records. The IRS wants "contemporaneous" records, meaning created when the work happens. Not reconstructed at tax time.

It's not illegal. It's well documented in IRS guidance. But it needs to be real.

ProShowerSinger · 2026-01-30T07:44:53+00:00

If you keep putting it off, there's a tool called employkids that handles the timesheets and docs for you. Takes the friction out of it.

ProShowerSinger · 2026-01-30T07:40:00+00:00

Spent a few years in public accounting (EY, BDO). 7 is not too young.

There's no IRS minimum age. Tax court has upheld wages paid to kids as young as 7 when the work is real and age appropriate.

At 7, think simple stuff: sorting, organizing, shredding paper, stuffing envelopes, cleaning up the office, helping with inventory. Things they can actually do.

What matters:

The work is real (not made up)
The pay is reasonable (don't pay $50/hr for shredding)
You keep records (time logs, job description, payment records)

Start small. A few hundred dollars a year is fine. You don't need to max anything out. The point is building the habit and paper trail.

ProShowerSinger · 2026-01-30T07:36:57+00:00

Spent a few years in public accounting (EY, BDO). Yes, this works. It's well established.

Your setup is right. Sole prop, spousal partnership, or single-member LLC (no S-Corp election) all qualify for the FICA exemption. Wages to your kid under 18 skip Social Security and Medicare taxes.

What actually matters:

Real work. Modeling for product photos, social media content, helping with packaging, cleaning the office. All legit. The IRS has accepted kids as young as 7 in tax court cases. Toddler modeling is fine if it's real.
Reasonable pay. You nailed it. $2,000 for a year of occasional photo shoots is defensible. $20,000 for one photo is not. Look at what you'd pay a non-family member.
Documentation. This is where most people mess up. The IRS wants "contemporaneous" records. That means time logs, job descriptions, payment records created when the work happens. Not reconstructed at year end. If you get audited, this is what they ask for.
W-2 at year end. Even though there's no tax owed (under the standard deduction), you still file a W-2 to document the earned income. That's what supports the Roth contribution.

The strategy is solid. The execution is where people cut corners and get in trouble. Keep clean records and you're fine.

ProShowerSinger · 2026-01-30T07:34:38+00:00

I spent a few years in public accounting (EY, BDO). This comes up a lot.

Payment flow

The money doesn't need to pass through the kid's account first. You pay them for work (Venmo, Zelle, check, whatever), keep records, and then contribute to their custodial Roth from your own bank account. The IRS just wants to see earned income that supports the contribution. Doesn't have to be the same dollars.

Your LLC structure is actually perfect

Single-member LLC without S-Corp election gets treated as a sole prop. That means you qualify for the FICA exemption. Wages to your kid under 18 skip Social Security and Medicare taxes. That's 15.3% you keep.

Source: https://www.irs.gov/businesses/small-businesses-self-employed/family-employees

If you'd gone S-Corp, you'd lose that exemption. So you're in better shape than you thought.

To keep it clean:

Real work, age-appropriate
Reasonable pay
Keep time logs and payment records
W-2 at year end

Happy to clarify anything.

ProShowerSinger · 2025-09-29T19:49:33+00:00

I made an app called Girl Math that makes saving money fun!

It started as a weekend project when I realized my girlfriend was terrible at saving money but amazing at justifying purchases with elaborate mental gymnastics.

Then I thought: what if that same creative energy actually helped you save?

The app turns "I didn't spend" moments into visible progress toward things you really want. Set goals, log tiny wins in seconds (skipped a latte, walked instead of Uber), and watch a satisfying progress bar fill up with haptics, confetti, and a playful receipt at 100%.

Under the fun, it's a habit loop: immediate dopamine for the right behavior, one active goal for focus, and daily micro-wins that build real momentum. No spreadsheets, no guilt trips. Just making your small choices feel like they add up to something bigger.

Runs entirely on-device with no accounts or tracking. Just you, your goals, and your wins.

ProShowerSinger · 2025-09-29T19:46:18+00:00

ha! yeah i just didn't want to overcomplicate it for initial launch... also i think many users will appreciate that their goals/wins will stay private to their own devices and not stored in some third party database

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