Stocks

[Help]

Hi,

I have a Fidelity account where I invest $100 per month per child into SPY, and I also make a significant contribution when they are born to save for their future, such as for their weddings. I would like to know if there are any special accounts or other methods available that could help minimize the tax burden on these investments.

All your advice are highly appreciated

Thank you!

Besides for the good options mentioned above, make sure to harvest the LT capital gains, if you are in the 0% bracket in any given year.

[whacked1]

You can only contribute to a Roth IRA if you have earned income. Your child has earned income?

Yes, i employ him through an LLC of mine as an independent contractor

[aygart]

Yes, i employ him through an LLC of mine as an independent contractor

I'm no professional but this sounds like a big huge. Please audit me sign

[ckmk47]

I'm no professional but this sounds like a big huge. Please audit me sign

If his job description is to eat, poop and be cute, I don’t see the problem.

[Help]

If his job description is to eat, poop and be cute, I don’t see the problem.

Classic TikTok tax advice. There are plenty of case law that disagrees with this. If interested I can show sources. This is a basic TikTok “how the rich avoid taxes” hack that rarely works in real life (if audited, of course). This and the Augusta rule.

[solmeir]

It would depend on the child’s age and job given. I can easily see someone employing their 10 yr old to sweep and mop the office and pay them. Add to the age and to the job description and you can get to 7k in justified value in a year.

[Help]

I'm no professional but this sounds like a big huge. Please audit me sign

To be fair, this is not necessarily a red flag as it dosnt say on the return who the contractor is.
But chances are extremely slim that this will pass under audit.

[Help]

Yes, i employ him through an LLC of mine as an independent contractor

If you're paying your kids as independent contractors, they must file a return and pay self-employment (SE) tax. pay them a wage. Besides the tax savings, your chances of passing an audit increase. There's no way your own kids can be considered independent contractors. You have a better chance of convincing the IRS that they are employees. Keep in mind that the burden of proof lies with us, the taxpayers.

[aygart]

To be fair, this is not necessarily a red flag as it dosnt say on the return who the contractor is.
But chances are extremely slim that this will pass under audit.

It is all on the 1099

[Help]

It is all on the 1099

Good point. I guess it might be safer to skip the 1099 in this case. Plenty of businesses miss some 1099s. AYLA.

[Help]

It would depend on the child’s age and job given. I can easily see someone employing their 10 yr old to sweep and mop the office and pay them. Add to the age and to the job description and you can get to 7k in justified value in a year.

Yes. the key is that it has to be “bona fide”. Simply paying your kids every year up until the standard deduction, will not pass the smell test.

[ckmk47]

If you're paying your kids as independent contractors, they must file a return and pay self-employment (SE) tax. pay them a wage. Besides the tax savings, your chances of passing an audit increase. There's no way your own kids can be considered independent contractors. You have a better chance of convincing the IRS that they are employees. Keep in mind that the burden of proof lies with us, the taxpayers.

I like employment for reasonable kid jobs.
If you actually have them do chores, good for them.

[gutlib]

ok, can someone summarize what are my options? (I'm getting confused )

thank you.

[Help]

ok, can someone summarize what are my options? (I'm getting confused )

thank you.

1) Harvest the LT gains yearly if you are in the $0 Bracket - Pay $0 taxes
2) Invest the money in a 529 Plan - Pay $0 taxes for qualified distributions. Use the cash you would've otherwise used to replenish the account. (+ you might be able to claim a state deduction - Not worth a ton of money...)
3) Donate the appreciated stock to charity (if you would've given cash otherwise) - Pay $0 taxes, get full FMV deduction. Use the cash you would've otherwise used to replenish the account.

Side note, I commend you for thinking about investing for the future. You are way ahead of of the game if you do this early enough!

Just curious, why not go with FXAIX? as far as I know it's the cheapest S&P index fund. Truth be told, it doesn't really matter as the expense ratios are extremely low. I'm just wondering what made you go with SPY.

[madhocker]

Thoughts about NVDA after massive run up? When are the shares due to split?

[Joel]

When are the shares due to split?

Jun 7 - 1- 10 split

[~King Lake~]

Don't ask me why (because there is no answer) but I once bought 4 stocks in Rolls Royce (sponsored adr)

I looked at it today & was excited for a millisecond until I read the next column...
Ok at least not a loss




But today's days I buy strictly etf's because of stocks like these that I thought (based on nothing) that it's probably a good idea to buy.



And within about a 1/2 a year the etf's brought my whole portfolio back to a green, covering all my stupidity of the last 3 years!

B"H it only took me 2.5 years to realize that.

[Kobe Bryant]

Market glitched!!!!!

[EliJelly]

Market glitched!!!!!

[avremie]

Would have made a great price to buy 😉