Make Your Kid a Millionaire…Tax Free!!
What would you do if someone gave you $1,000,000?
…AND if that $1M was TAX FREE!!
No, this isn't a “get rich quick scheme”…in fact it's quite the opposite.
It’s a get rich really slowly plan.
Below is how to give your kids $1,000,000 TAX FREE!!!
So here is the strategy...
If or when you have kids, while they are young there is likely something they can do to help your business:
organize your files
vacuum your office
take out the trash
etc
There are legitimate ways for them to work for you and in turn you pay them.
Under the current tax structure, you can pay them up to $12,950…and it will be a tax write-off for your business…AND
…TAX FREE income for your child!
Here is the part where you help them out…
…open a ROTH IRA in their name.
The money you paid them is now eligible for a ROTH IRA contribution.
Next…Deposit the money into a ROTH IRA for their retirement. (Max allowed in 2022 = $6,000)
ROTH IRAs are only eligible for people that have earned income…meaning they are getting income from a job (income from dividends and interest do NOT count for ROTH IRA eligibility).
Important Reminder….the upcoming scenario is a hypothetical example only, results will vary for you…this is educational only and NOT advice for your specific situation.
ROTH IRA for Your Child Example:
If you hire your 10 year old child, and pay them $10,000 a year (for doing legit work)
You give them $4,000 (or put towards college)…and then put $6,000 into their ROTH IRA
Do this each year until they turn 17 (7 years of contributions for you)
You will have contributed appx $42,000 in their ROTH IRA during those 7 years
At age 70, your child would have appx $1,000,000 in their ROTH IRA. (Assuming a reasonable rate of return of 6%)
Key Benefits:
Using the power of compounding interest, you can "give" your child approximately $1M by only contributing about $42,000
You receive business tax deductions to fund your child’s retirement
That money can be withdrawn completely tax free for your child (at retirement age)
You are teaching your child about financial education at a young age
This tax strategy of paying your kids can be used in a number of other ways...such as funding college expenses, etc.
I wanted to highlight if you focused on putting that money into a ROTH IRA. Especially the earlier the better because of the power of compounding interest.
As a Fitness Coach, there are many opportunities like this available to you, and they might seem great but also overwhelming to pick the appropriate one for your circumstances.
If you want to take away the stress of financial decisions, let’s jump on a brief call to show you how I can help provide financial peace to you and your business.
Best
Pat
Disclaimer: This is meant to be educational. This is NOT advice for your specific situation. Please speak with a qualified financial professional before making any changes to you or your child’s saving strategy.