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Posted by Phil Marti on February 27, 2007, 4:33 pm
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> Paying a child is a great tax planning tool, as they can
> then open an traditional IRA and exclude all the income up
> to the $4000 limit, and still learn about savings and tax
> planning.
IMO a far better approach is for the child to open a Roth
IRA, assuming we're talking about gross wages less than the
Single standard deduction. The child still doesn't pay any
tax, and the Roth distributions will be tax-free after many
years of growth.
--
Phil Marti
Clarksburg, MD
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