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Help your Teens Start Saving Tax Free! 

Let your teenage son or daughter enjoy the benefit of more money and the right money management habits by having them invest in a Roth IRA!

Tax-free compounding of contributions and investment returns over your teenage child’s lifetime is a great wealth builder, so here’s what you need to know:

There’s no minimum age to open a Roth IRA. All your child needs is earned income from a summer job or self-employment.

The maximum contribution for 2015 is $5,500 or less. You can provide some or all of the cash, up to the amount of your child’s earned income.

Your child will not receive a federal tax deduction for a Roth IRA contribution BUT will pay no federal income tax on qualified distributions taken after 59 ½.

You can still claim your child under your tax return as an independent. Your child is also allowed a federal standard deduction of $6,300 for 2015.

You can benefit from additional tax savings, including a payroll deduction for your business if you own a business and can employ your child. Depending on how your business is organized, you may not have to pay federal payroll taxes.

An early Roth IRA withdrawal could affect your child’s college financial aid. Your child can take withdrawals from a Roth penalty-free to pay for college costs. However, those withdrawals will generally count as income when applying for financial aid.
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