Has anyone actually tried setting up a Roth IRA for a minor? Which companies make this easy? My son is interested but I'm not sure where to start with the actual account setup.

Great question! I've been researching this exact scenario for my own kids. The key distinction the IRS makes is between "chores" (which are considered part of normal family responsibilities) and legitimate business activities. For your specific situation with the $20 lawn mowing, if it's just your family's lawn as part of regular household chores, it typically won't qualify as earned income for IRA purposes. However, there are a few ways to make this work legitimately: 1. Help your son start an actual lawn service business where he services multiple properties in the neighborhood, not just yours. This creates genuine self-employment income. 2. If you have a business (even a side business), you could formally employ him to do lawn maintenance, office cleaning, or other legitimate business tasks at reasonable wages. 3. Consider other entrepreneurial opportunities - many teens successfully run small businesses like pet sitting, tutoring younger kids, or selling items they make. The important thing is that the work and payment need to have genuine business purpose beyond just family chores. Once he has legitimate earned income, he can contribute up to 100% of that income to a Roth IRA (up to the annual limit of $7,000 for 2025). Keep detailed records of any payments and work performed. This early start on retirement savings is an amazing gift - compound interest over 50+ years will be incredible!

Just wanna add that if you're not making a profit for several years, the IRS might classify your farm as a hobby rather than a business. Generally, they expect you to show a profit in 3 out of 5 consecutive years (though the rule is 2 out of 7 years for horse operations). If you get classified as a hobby, you lose all those business deductions. So document EVERYTHING that shows you're trying to make a profit - your business plan, marketing efforts, education/training, improvements aimed at efficiency, etc.

Something that hasn't been mentioned yet is the importance of keeping a detailed activity log from day one. I learned this the hard way when the IRS audited my small farm operation three years in. They wanted to see proof that I was spending substantial time on legitimate business activities, not just weekend hobby farming. I'd recommend tracking your hours weekly - time spent researching markets, maintaining equipment, caring for animals, preparing land, etc. Also document any educational activities like attending farming workshops, reading agricultural publications, or consulting with extension agents. This creates a paper trail showing business intent even before you have revenue. One more tip: consider getting your farm business properly registered and obtaining any necessary licenses or permits for your area, even if you're not selling yet. Having official recognition as an agricultural operation strengthens your position if questions arise about business legitimacy.

Something important: MAKE COPIES OF EVERYTHING before you mail it! I sent in a late return last year and the IRS somehow lost it. Having copies saved my butt when I had to send it again. Also, if you owe money, don't forget you can set up a payment plan if the amount with penalties is too much to pay at once. You can apply for an installment agreement using Form 9465.

Just wanted to add something that might help - if you're really stressed about the penalties and interest that have accumulated since 2019, you might qualify for penalty relief under "reasonable cause" provisions. Since you mentioned your ex was handling finances and you genuinely didn't know about the unfiled return, that could potentially qualify. You'd need to include a letter explaining your circumstances when you mail your return. The IRS considers things like reliance on a tax professional or spouse, serious illness, or other circumstances beyond your control. It's worth a shot - worst case they say no, but I've seen people get penalties reduced or eliminated this way. Also, double-check that you're using your current address on the return, not your 2019 address, so any correspondence reaches you. And like others said, certified mail is absolutely essential - treat this like you're mailing something precious because basically you are!

I'm dealing with almost the exact same situation! Got married in August and joined my husband's family HDHP in September after having a general-purpose FSA through my old employer for the first 8 months of the year. Reading through all these responses has been super enlightening - I had no idea about the FSA creating HSA ineligibility for the entire tax year even without overlap. My benefits administrator told me I could use the last month rule for the full family amount, but it sounds like that's incorrect based on what everyone is saying here. So for my situation, would it be: Individual limit for my husband (Jan-Aug) + Family limit for both of us (Sep-Dec)? That would be roughly ($4,150 ÷ 12 × 8) + ($8,300 ÷ 12 × 4) = $2,767 + $2,767 = $5,534 total? This is such a frustrating rule, but I definitely don't want to deal with penalties and audits. Thanks to everyone for sharing their experiences - it's really helpful to see how others navigated this!

Just wanted to add my experience as another data point - I had a similar FSA-to-HSA transition situation three years ago and initially made the mistake of contributing the full family amount thinking the last month rule would cover me. The IRS actually caught this during a routine correspondence audit about 18 months later. They sent a letter asking for documentation about my HSA eligibility throughout the tax year. When I provided my FSA and insurance records, they determined I had overcontributed by about $2,400. I had to pay income tax on the excess contribution plus a 6% excise tax for each year it remained in the account. The process was a hassle but not the end of the world - I was able to remove the excess contribution and avoid ongoing penalties. The lesson I learned: always err on the side of caution with HSA contributions, especially in transition years. The prorated calculation everyone's discussing here is definitely the safe approach. Better to contribute less and avoid penalties than to risk an audit and the associated headaches. If you're unsure about your calculation, consider consulting a tax professional who specializes in HSAs. The few hundred dollars in consultation fees can save you thousands in penalties and interest down the road.

One strategy worth considering that hasn't been fully explored is tax-loss harvesting within the existing portfolio. If your brother-in-law gifted multiple tech stocks over three years, you likely have different tax lots with varying cost bases. Some positions might actually be at a loss or have smaller gains that you could sell first to begin diversification while minimizing the immediate tax impact. You could also consider a "barbell" approach: keep some of the best-performing, lowest-tax-impact positions while gradually diversifying the rest. This gives you some continued upside participation in those individual stocks while reducing overall concentration risk. Another timing consideration - if your son will be applying for college in the next few years, you might want to complete the diversification (and take the tax hit) before his junior year of high school. This way, the UTMA balance is lower when you start filing FAFSAs, reducing the financial aid impact. The one-time tax payment might be worth it compared to years of reduced aid eligibility. Don't forget to factor in your state's tax implications too - some states have no capital gains tax, while others treat it as regular income. This could significantly affect your total tax burden depending on where you live.

Based on the excellent discussion here, I'd recommend a phased approach that balances tax efficiency with your diversification goals. Since your son is only 12, you have time to be strategic. First, request detailed tax lot information from your broker showing the purchase dates and cost basis for each gift. Look for any positions that are at a loss or have minimal gains - these should be your first candidates for selling and reinvesting in your S&P 500 fund. For the remaining positions, consider selling just enough each year to stay under the $2,500 kiddie tax threshold (around $1,250 in actual gains after the standard deduction). This gradual approach will take several years but avoids the large tax hit while steadily reducing concentration risk. However, if college is definitely in your son's future, there's merit to accelerating this timeline. Completing the diversification by his sophomore year of high school could significantly improve financial aid eligibility, as UTMA assets are assessed at 20% versus 5.64% for parent assets like 529 plans. One hybrid strategy: sell positions with the highest cost basis first (lowest taxable gains), reinvest in index funds, and keep 1-2 of the best performing individual stocks with the lowest basis. This gives you diversification while maintaining some upside exposure. Also consider discussing future gifting strategy with your brother-in-law - cash gifts instead of appreciated stock would avoid this complexity going forward.