IRAs for Kids

I’m Kevin McCormally of Kiplinger’s with today’s tax tip. This tip is for teenagers who have summer jobs last year. Why not start an individual retirement account and stick part of your—shelter. You see if you already smell the money. Okay then try this. Ask your parents or grandparents to help find an IRA. The law says, you have to have earnings to have an IRA but it doesn’t save your own money, it has to go into the account.

Here’s a technique that might work. Remind your folks that by claiming you as a tax dependent, they save $875.00 in taxes, if they’re in 25% bracket and then dazzle them with this fact, if they give that money to you for an IRA, you’ll grow them more than $40,000 over the 50 years until you retire. Assuming you have the 8% annual return and if you use a Roth IRA, it’ll all be tax free. You have until April 15th of this year to make an IRA contribution.

For more tax tips to help lower your tax bill, visit the Kiplinger Tax Center at www.kiplinger.com/taxcenter.


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