Tax treatment for minor with Roth IRA and ex-spouse

Question

I want to open a custodial Roth IRA for my 16 year old that has some earned income. As I understand I'll need to prove that contributions aren't exceeding a maximum, which I imagine is just some tax forms that I or a CPA can figure out.

The challenge of the situation is that my child is claimed on my ex-spouse's taxes each year and my ex-spouse will be filing my child's taxes with her filing. Is it okay for me to be the custodian of the Roth IRA or must that be the parent that claims/files their taxes? Can I be the custodian and simply pass on the tax forms that the brokerage gives me at the end of the year to my ex-spouse to include in her filing? Any suggestions?

Answer 1

You don't need to include any tax forms when filing taxes, the brokerage reports contributions directly to the IRS. The IRS then matches the contributions to the earned income reported on the tax return and will impose excise 6% tax per year on the excess contributions.

As to who can be the custodian of your child's IRA - you should check that with your family law attorney and see what the custody agreements say, it has nothing to do with taxes or finances.