Half more - child custodial Roth IRA compliance

[Anonymous]

Looks like this recently launched, was served an Instagram ad this morning:

https://halfmore.co/

Halfmore makes it simple to turn your child's household tasks into legitimate, IRS-compliant income.

Turn household tasks into earned income

- From babysitting to mowing the lawn, Halfmore structures household work into compliant, reportable income.
Ensure IRS compliance
- We handle the paperwork - W-2, wage tracking, and employment documentation - to be IRS-compliant and audit-ready.
Contribute to major broker
- Stay in control of your investments by using your Roth IRA provider of choice - Fidelity, Vanguard, Charles Schwab, or others.

Pretty interesting. I’m assuming they’ve had tax lawyers design and check this for compliance. Appears that it’s available in DC and VA, but not MD

[Anonymous]

Not sure what is interesting about this. Kids don’t need w-2 wages. They just need earned income. Household work is fine as long as you document each.

[Anonymous]

Anonymous wrote:Not sure what is interesting about this. Kids don’t need w-2 wages. They just need earned income. Household work is fine as long as you document each.

What’s interesting about this is that they seem to be unlocking it for families with W-2 wage earners. The long-standing (mis?)conception was that this was only available in cases where parents owned a business. The documentation and compliance cost were not worth the squeeze for W-2 families.

[Anonymous]

Nothing burger here

[Anonymous]

This is for parent to do without Halfmore or Fulmore. They want your money.
There is zero need to do it before the child indeed gets a job at 18 even if possible.
Getting higher interest pays off more than starting early. I did 100% two years in a row when everyone said it can't be done. I'm already 14 years ahead.
Open your own and leave it to the child.
It's not worth the hassle of paperwork and having to follow the rules.

[Anonymous]

Anonymous wrote:Not sure what is interesting about this. Kids don’t need w-2 wages. They just need earned income. Household work is fine as long as you document each.

Household work is not fine. Go read the rules on employing family members as HH employees. And for bonus tell me with a straight face that someone not your kid’s parent would ever be willing to pay them for the chores they do.

This is just people making money off gray area scams. I’m sure they talked to a lawyer who said it’s not impossible this could work and they ran with it paying no attention to all the caveats. Reminds me of Fisk actually.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Not sure what is interesting about this. Kids don’t need w-2 wages. They just need earned income. Household work is fine as long as you document each.

Household work is not fine. Go read the rules on employing family members as HH employees. And for bonus tell me with a straight face that someone not your kid’s parent would ever be willing to pay them for the chores they do.

This is just people making money off gray area scams. I’m sure they talked to a lawyer who said it’s not impossible this could work and they ran with it paying no attention to all the caveats. Reminds me of Fisk actually.

Household work of other families like babysitting or mowing. Don’t be so literal.

[Anonymous]

I looked into Roth IRAs for kids years ago, but since I don’t own a business it didn’t seem legitimate to set one up by “hiring” them. I do know families who run businesses and pay their kids for things like cleaning or modeling so they can contribute the maximum.

What we did instead was simple: once our kids started working real jobs—retail, refereeing, lifeguarding—we matched their earnings by contributing that same amount into a Roth IRA for them. They only made a few thousand in those early years, but invested in a passive index fund, the accounts have already grown substantially. Best part: the kids keep and spend the money they earned like any other teenager, while still building a long-term nest egg.

[Anonymous]

This seems like a fast track to being audited. Even if the IRS winds up thinking it's ok (big maybe) and doesn't find any other mistakes you made, it seems like a big hassle. There are so many other ways to save money and give it to kids at various points in their lives; why mess with this?

[Anonymous]

Anonymous wrote:I looked into Roth IRAs for kids years ago, but since I don’t own a business it didn’t seem legitimate to set one up by “hiring” them. I do know families who run businesses and pay their kids for things like cleaning or modeling so they can contribute the maximum.

What we did instead was simple: once our kids started working real jobs—retail, refereeing, lifeguarding—we matched their earnings by contributing that same amount into a Roth IRA for them. They only made a few thousand in those early years, but invested in a passive index fund, the accounts have already grown substantially. Best part: the kids keep and spend the money they earned like any other teenager, while still building a long-term nest egg.

This is the way. It's good for kids to have summer jobs anyway