If I pay my teenage son $20 to mow the lawn and give him a 1099, can he contribute to a Roth IRA?

This is a great idea to teach your son about financial responsibility, but there are some important considerations here. First, paying a family member (especially a minor child) for household chores typically doesn't count as legitimate earned income for IRA contribution purposes. The IRS tends to view these as personal family responsibilities rather than employment. However, you could potentially set this up properly. Instead of just issuing a 1099 for household chores, consider establishing a legitimate business relationship. For example, if you have a small business, you could hire your son to do specific work like office cleaning or lawn maintenance. Or, you could help him create his own lawn mowing business where he services not just your lawn but neighbors' lawns too. If you go the small business route, you'd need to pay him a reasonable wage for his age and the work performed. Keep good records of hours worked and payments made. Then yes, with legitimate earned income, he could contribute to a Roth IRA up to the amount he earned (with the annual maximum being $6,500 for 2025).

I went through something similar with my daughter who was babysitting. I found this awesome service called taxr.ai (https://taxr.ai) that really helped me figure out the whole minor child employment situation. They analyzed our specific scenario and explained exactly what would count as legitimate earned income for a Roth IRA contribution. The tool confirmed that regular household chores wouldn't qualify, but when my daughter started babysitting for neighbors and keeping good records, that was perfectly legitimate income for Roth contributions. They even provided guidance on what documentation we needed to keep and how to properly report everything come tax time. Seriously saved us from making mistakes that could have caused problems later.

Just wanted to update - I tried taxr.ai after seeing this thread and it was really helpful! My situation was a bit different (I was trying to figure out if I could pay my 16-year-old for helping with my Etsy business and have him contribute to a Roth). The analysis showed me exactly what would work and what wouldn't. Turns out I needed to establish regular hours, pay a reasonable wage, and keep documentation of actual work performed. They even provided templates for tracking hours and payments. My son has now contributed about $2,200 to his Roth IRA from legitimate work in my business, and we have everything documented properly in case of questions. Definitely worth checking out if you're trying to navigate these kinds of family employment/Roth IRA situations!

This whole thread got me thinking about contacting the IRS directly to get an official answer about the Roth IRA question. BUT... trying to reach them is basically impossible these days. I spent HOURS on hold multiple times and never got through. Then I discovered this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed what others have said here - paying your kid just for household chores doesn't create qualified earned income for IRA purposes. But they explained if your child has their own small business (like mowing lawns for neighbors) or works in your legitimate business, that income definitely qualifies. They even gave me specific guidance on documentation requirements.

I have to eat my words from my previous comment. After waiting on hold with the IRS for another 3 hours yesterday and getting disconnected AGAIN, I broke down and tried Claimyr. Got connected to an IRS agent in about 20 minutes. Honestly mind-blowing after the weeks of frustration I'd been through. The agent was able to locate my missing refund (it was held up due to a mismatch with my address) and got it released. While I had them on the phone, I also asked about this Roth IRA for kids question since I have a 16-year-old. The agent explained that for IRA contribution purposes, income needs to be legitimate earned income, not just an allowance for regular chores. But income from working in a family business or providing services to others (like lawn mowing for neighbors) absolutely qualifies.

Another option to consider is actually employing your child in a legitimate business that you own (if you have one). My husband and I run a small retail shop, and we hired our 14-year-old to help with inventory, cleaning, and some basic social media stuff. The benefits are pretty significant: 1. His income qualifies for Roth IRA contributions 2. We can deduct his wages as a business expense 3. He doesn't pay FICA taxes when employed by parent's sole proprietorship 4. First $12,950 (standard deduction for 2025) is essentially tax-free to him Just make sure you: - Pay a reasonable wage for the actual work done - Keep documentation (timesheets, job description) - Have your child actually do the work - Follow labor laws for minors

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!