I made a huge income jump from a career move right after having a baby. I do not want to do any lifestyle creeping and would rather put this money to work with compound interest. I'll already be maxing out my and my wife's Roth IRA and Roth 401k, and I already contribute to a 529. I have more excess money that I want to save on behalf of my children. I'm trying to figure out the best method of doing so.
I know the following:
- You can open a Roth IRA for a minor, a "custodial" account.
- If you make less than the standard, you do not have to pay taxes
This leads me to assume that I would be able to pay my baby a salary of 6,000 a year to, for example, visit his grandparents, which will be enough to fill up his Custodial Roth IRA, and the money will not have to be taxed because it's below the standard deduction. Is this the case? If so, what would I need to do exactly? Would I even need to file a W2?