October 17, 2016
If you’re like many parents and grandparents, you may already be thinking about what kind of gift to get the children on your list this holiday season. For teens and young adults especially, it can be challenging to come up with truly unique and meaningful gifts. One idea with long-lasting impact is to make a contribution to either a traditional or Roth IRA on your children or grandchildren’s behalf.
IRS rules state that the maximum that can be contributed to an IRA each year is the lesser of the child’s earned income or $5,500 (the 2016 limit for an individual under age 50). So if your child or grandchild already has an IRA, you’ll need to know if they’ve already contributed to it this year.
If your child or grandchild does not have an IRA account already, you’ll need to decide on the type of IRA you would like to use for your gift (i.e. a traditional or Roth IRA). Traditional IRA contributions are tax deductible with taxes paid when the funds are withdrawn at retirement. Conversely, Roth IRA contributions are not tax deductible. However, the distributions, including earnings, are tax-free at retirement.
As long as your contribution to an IRA is below the annual $14,000 gifting exemption, it is not subject to any gift tax unless you give additional reportable gifts throughout the year. Keep in mind that such a contribution will not hold any benefits for you on your own income tax return.
If you have questions about an IRA holiday gift for your children or grandchildren, please contact our office.
Prior to moving to Madison, the last bike I owned was a Nashville Predators themed bike I won at the age of 9, so it had been a while since I found myself in the saddle. Upon my arrival here, I discovered the city’s rich biking culture as well as its system of paths and knew I had to take advantage of all it had to offer. After a couple of years of riding and exploring, I feel like I know my way around town on a bike pretty decently.
Do online reviews help or hurt a business? Depending on the type of review, of course, it could go either way.
The IRS has provided guidance to employers regarding the recent presidential action to allow employers to defer the withholding, deposit and payment of certain payroll tax obligations. The three-page guidance in Notice 2020-65 was issued to implement President Trump’s executive memorandum signed on August 8. Private employers still have questions and concerns about whether, and how, to implement the optional deferral.