132

Your E-file return will be rejected if you are the second person to file, so you should file a paper return claiming your child, and you'll get your refund as you filed it. You and the other party claiming your child will both receive letters from the IRS notifying you that someone else has claimed your child as a dependent. If neither party files an ...


125

My suggestion would be that you're looking at this the wrong way, though for good reasons. Once you are a family, you should - and, in most cases I've seen, will - think of things differently than you do now. Right now, your post above is written from a selfish perspective. Not to be insulting, and not implying selfish is a bad thing - I don't mean it ...


81

You remind me a lot of myself as I was thinking about marriage. Luckily for me, my wife was much smarter about all this than I was. Hopefully, I can pass along some of her wisdom. Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. In marriage, there is no more financial ...


78

You need to call the IRS at 1-800-829-1040 and explain that you are the custodial parent. The IRS service representative will tell you what to do. Generally what will happen is that you will re-submit your return and the IRS will examine claims of both parties and decide who gets the dependent.


72

I started out thinking like you but I quickly realised this was a bad approach. You are a team, aren't you? Are you equals or is one of you an inferior of lower value? I think you'll generate more shared happiness by acting as a team of equals. I'd pool your resources and share them as equals. I'd open a joint account and pay both your incomes directly ...


67

Operating a lemonade stand would count as self-employment, and if they earned more than $400 they would be required to file a tax return. In this case, the income is too low for there to be any income tax obligation, only a filing requirement due to self-employment income. The tax return would be theirs, but the parents would still claim the child as a ...


56

Forget the Roth for one moment. Having a $5500 deduction for your LLC would be great. Parents hire their kids all the time. To do real work at a reasonable wage. Do you have work that's appropriate for the child and would it pass the duck test*? If not, don't do it. (per a request via comment - A duck test - "Is the work real and substantial enough that the ...


55

Typically a trust is the solution to this. You set up a trust fund, and either fund it with money now, or (more likely, in your situation given your income) make it the beneficiary of a life insurance policy. The trust would invest in something with a reasonable return; say assume 3% to be safe. So you'd need £24,000 per year, so you need at least £800,...


41

If I were you I would simply use a check register, cash, and jars. Check register sheets can be printed online and increased to an appropriate size. I really like Dave Ramsey's teaching on this. To me it is world class: Children earn a commission, not an allowance. They earn this commission by doing work. If they don't work they don't get anything. ...


34

This actually happened to my brother. Started a Minecraft server at the age of 14 which became massive and netted him about 100k through donations in a year. He had to file it as personal income (my parents obviously helped him do it) and pay taxes on it himself.


28

Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) accounts in the United States are accounts that belong to your child, but you can deposit money into. When the child attains his/her majority, the money becomes theirs to spend however they wish. Prior to attaining their majority, a custodian must sign off on withdrawals. Now, ...


27

(This is not an answer to your question, but needs to be said anyway.) it would be much easier to finance the laptop instead, since (mumbled excuse). Even if it's legal, (and I completely sympathize with your desire to get a laptop for "school") DON'T DO IT. Why? Because it gets you in the habit of putting your future at risk for immediate ...


27

I've recently switched over to an allowance system that is attempting to teach my son the value of money, and more specifically, saving money to earn more money. It's a very exaggerated interest-based system, but for a 7 year old it so far seems to be doing the trick. First, I don't pay him an allowance for doing specific chores. I personally think it sets ...


25

Since she essentially only has a cash register, a simple cash journal should do the job. Have her do weekly sums and compare with the contents of the piggy-bank. If she forget to record some spending, she should notice there and still be able to remember. If not have her do daily sums.


20

With that close an age gap it would probably make sense to use separate 529s. Technically you can transfer funds and even change the beneficiary from one sibling to another, but if both are in college at the same time you would probably want to let both of them use 529 money at the same time. Also, with multiple accounts you have more flexibility over the ...


18

No, you may not deduct the charitable contributions of your children. The Nest covers this in detail: The IRS only allows you to deduct charitable contributions that you personally funded, whether the contribution was made in your name or in someone else's. If your child or dependent makes a donation to a charity, you are not allowed to claim it as a tax ...


18

I would highly advise you to speak to a lawyer. Given that the court gave you full custody of your child, then you are the one to claim him as a dependent. The IRS doesn't know the outcome of your divorce, therefore they had no way of knowing who has custody, they go off of who filed first.


16

A not dissimilar thing had happened to me. Nathan's answer is correct from a technical point of view, but you should also provide a letter to the IRS and selected highlighted pages from the court order. The letter should state your situation and point out areas of the court order that supports your claims. Doing this, in my case, prevented the IRS from ...


15

As long as the baby was born by December 31, 2015, he can be claimed as a dependent by his parents for tax year 2015. He should definitely be claimed as a dependent; it will save them money on their taxes, and there is no reason not to. The baby does not need to file a tax return, but he does need a Social Security number in order for the parents to claim ...


15

A bit more detail to complement the advice already given. You need around £800k - £1M to comfortably allow for an ongoing income of £20k per annum. I would get some advice from a qualified IFA however as there may be other methods that require less capital. You can get life insurance fairly cheaply to cover you up until retirement age, ie I am paying £16 a ...


14

No they do not. From form 1040 instructions, a single, non-blind dependent under age 65 must file if the following are true: You must file a return if any of the following apply. Your unearned income was over $1,000. Your earned income was over $6,200. Your gross income was more than the larger of— $1,000, or Your earned income (up to $...


14

Now I have been trying to figure out how to split the money that we both earn. From what I can see there are several concepts but none of them really seems ideal to me. There is nothing fair or unfair in such arrangements. It is what you both agree. You can try and make this as scientific as possible. But then there is no golden rule. For example, your ...


13

I started this off as a comment to Joe's answer, but it got rather messy in that form so I'll just post it as a separate answer instead. I suggest that you read Joe's answer first. I believe you are overthinking this. First, you really should be discussing the matter with your girlfriend. We can provide suggestions, but only the two of you can decide what ...


12

A 529 has a custodian and beneficiary. If, say, my Mom is custodian and my daughter the beneficiary, neither my daughter, my wife, nor I can access this account. In fact, if my daughter chooses not to attend college, Mom can change beneficiaries. So, a 529 is ideal for what you have described. By the way, your wife may have broken the law. Money in your ...


12

If you have the option of a high deductible health plan you might consider using a High deductible plan with a Health Savings Account (HSA) in the years before the first child is born. You can contribute the maximum into the HSA but don't use the money. You may decide that in the year the child is born to pick a non-high deductible plan, but because the ...


11

Whether someone needs to file a tax return for a given year is covered in a section at the beginning of each year's Form 1040 instructions, called "Do You Have to File?". Generally, if the income that year is below a certain threshold (this threshold varies depending on filing status, whether the person is claimed as a dependent, and other factors), then the ...


11

There aren't any. Of these significant, relatively predictable expenses I would not necessarily classify child birth cost as either significant or predictable. Depending on your health insurance a healthy baby birth will cost very little out of pocket. Even with crummy insurance, many children can be birthed for less than $1,000. Often prenatal ...


10

It's a matter of keeping contemporaneous records for legitimate income. My daughter started baby sitting at age 11, and even then, was earning $10/hr. I told her that in exchange for keeping a notebook listing the date, name, time, and money earned, I'd make deposits to her account. It's important to note that the exact dollar earned doesn't have to be ...


10

First you need to ensure that you are not violating any Federal child labor laws. I would look at this: U.S. Dept of Labor, Wage & Hour Div., Standards for 14- and 15-Year Olds in Nonagricultural Employment. These were the items that pertained to Federal Law, for 14 year olds: 14 is the minimum age for employment in specified occupations outside of ...


Only top voted, non community-wiki answers of a minimum length are eligible