Babysitting and Taxes

Does your working child owe self-employment tax on his or her earnings? Plus, find out the rules for contributing to a kid's Roth IRA.

My daughter will be able to open a Roth IRA this year with money she earns from babysitting over the summer. Does she need to pay the self-employment tax, which would eat up 15.3% of her income?

No, your daughter does not have to pay the self-employment tax. Ordinarily, individuals must pay the tax if their net earnings from self-employment are $400 or more. But there are special exceptions for kids.

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Janet Bodnar

Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.