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Roth IRA Contribution Question

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  • #1

    Roth IRA Contribution Question

    DD worked at an internship type program last summer and earned $1500. I would like to match those funds and invest for her in a Roth IRA. However, all she has are paystubs as proof of working. She indicated that per the contract she signed -- no 1099 will be issued. She is of course under the threshold for the filing requirement. I am assuming that she would need to file a return simply to account for the Roth IRA contribution. Is this OK to do without a 1099?

    Thank you in advance.................
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  • #2
    Absolutely. I had DD open a Roth when her only income was babysitting money which was all cash. There was no documentation at all, not even paystubs. It was totally based on her keeping a handwritten log of her earnings.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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    • #3
      You can definitely file a return without a 1099. You will have to pay self employment taxes on the earnings (15.3%), but no income tax. I'm not sure how the company gets away without issuing a 1099, but that's not your problem.

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      • #4
        Thank you for the replies. Her contract with the internship specifically stated that no 1099 would be issued. She only made $1500 which is under the threshold for filing a return. There should be no self employment taxes since she is under the reporting threshold. If that is wrong, please let me know and I will dig further.

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        • #5
          Just file, showing the wages that are known, keep the contract and bank statements (where deposits were made) in case of an audit. Then contribute to the Roth. There will be no taxes, because of being under the threshold. Technically, you probably don't even need to file and could simply contribute, but you might feel better having on file the wages to match up with the contribution made.
          My other blog is Your Organized Friend.

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          • #6
            Originally posted by SavingBucks View Post
            Thank you for the replies. Her contract with the internship specifically stated that no 1099 would be issued. She only made $1500 which is under the threshold for filing a return. There should be no self employment taxes since she is under the reporting threshold. If that is wrong, please let me know and I will dig further.
            The threshold for self employment tax is $400. You can check the IRS website for specifics.

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