Minor Roth IRA contribution from babysitting income, does minor need to file a return?
I'd like to open a Roth IRA for my teen to contribute an amount equal to her babysitting income (about $4.5k for 2024). I claim her as a dependent. Does she need to file a tax return for the income? Pay self-employment taxes? Thank you.
Answers
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Self-employment tax on Self-employment income must be paid, even if someone is a dependent and under the standard deduction. If a dependent needs to report self-employment income, then they must file their own tax return. Generally speaking, if self-employment income is over $400, then a dependent needs to file a tax return. If she does end up filing a return, make sure that she indicates that she is a dependent on this return! See IRS pub 929 for more details:
Publication 929 (2021), Tax Rules for Children and Dependents | Internal Revenue Service
