Can I Pay My Child for Chores and Contribute to a Roth IRA?

One of the most common questions I get is some version of this: “My kid earns money doing things around the house — can I pay them for that and then contribute to a Roth IRA for them?”

It’s a genuinely important question, because the Roth IRA is an extraordinary wealth-building vehicle for young people, and parents naturally want to find ways to start funding one as early as possible. The short answer is: it depends on exactly how the arrangement is structured, and the IRS has specific rules that matter here.

Getting this wrong could mean contributing to a Roth IRA based on “income” the IRS doesn’t recognise — which creates an excess contribution, triggering penalties. Let me walk through exactly what counts and what doesn’t.

The Core Rule: Earned Income Is Required

A custodial Roth IRA requires that the contributor (the minor) has earned income equal to or greater than the contribution amount. The IRS defines earned income as income from work — wages, salaries, tips, and net self-employment income. Investment income (dividends, interest, capital gains) does not count.

This is the gate that all “can my child contribute to a Roth IRA?” questions pass through. The key is whether the income is genuinely “earned” in the IRS sense.

The Critical Distinction: Legitimate Work vs. Household Chores

Here is where families most often get into trouble:

What Does NOT Count as Earned Income for a Roth IRA

The IRS does not consider standard household chores paid by a parent to be “earned income” for purposes of IRA contributions. If you pay your child an allowance for tasks like:

• Taking out the trash
• Doing the dishes
• Vacuuming or cleaning their room
• Mowing the family lawn as part of household duties
• Doing laundry

…this generally does not constitute earned income for Roth IRA purposes. These are household maintenance tasks that a child is expected to contribute to as a member of the household. The IRS’s position — and the courts’ interpretation — is that payments for ordinary household chores are effectively an allowance, not compensation for services rendered.

Additionally, you do not need to pay your child employment taxes on household chore payments, which is actually the clearest signal that these payments are not treated as wages. Without employment taxes being paid and a W-2 being issued, the income will not appear on any tax filing as earned income — and the IRA cannot be funded based on it.

What DOES Count as Earned Income for a Roth IRA

The distinction is legitimate economic activity — work that produces something of real economic value, compensated at arm’s-length rates (what you’d pay anyone else to do it):

• A legitimate family business payroll — If your child works in a family business (your LLC, S-Corp, or sole proprietorship) doing genuinely useful work, you can put them on payroll. You must pay them reasonable compensation for their actual work, withhold taxes, issue a W-2, and treat the employment the same as you would any employee. This does create earned income for Roth IRA purposes.
• Self-employment income — If your child mows neighbours’ lawns, babysits, offers a tutoring service, creates and sells content, or performs other legitimate services for third-party customers and earns income, that is self-employment income. It is earned income for Roth IRA purposes, even without a W-2. Net self-employment income (after the self-employment tax deduction) is the relevant figure.
• Traditional employment — Any W-2 job, including part-time work, seasonal work, food service, retail, acting, modelling, or sports. If the employer issues a W-2, the income shown is earned income for Roth IRA purposes.

The Family Business Payroll Strategy: What Works

If you are trying to work out which business would even apply to you, I went through the types of home business that can legitimately pay your kids, and the jobs children can actually do in more detail separately.

The most common legitimate strategy for younger children is putting them on the payroll of a parent-owned business. This works — but only if you follow the rules correctly:

1. The work must be real and documentable — your child must actually perform services that your business needs. Examples: helping with social media content, answering emails (for older children), stuffing envelopes, data entry, helping at events, cleaning the office.
2. The pay must be reasonable — pay at the rate you’d pay a third party for the same work. Paying a 10-year-old $50,000 to “be the face of the brand” will not survive IRS scrutiny.
3. Proper payroll must be run — issue paychecks, withhold FICA taxes (for incorporated businesses) or use the parent/child exemption (for sole proprietors — more on this below), and issue a W-2 at year end.
4. Document everything — keep a simple timesheet or log of what the child did, when, and for how long.

Important tax advantage for sole proprietors: If you operate as a sole proprietor (Schedule C) or a single-member LLC taxed as a sole proprietor, wages paid to your child under 18 are exempt from Social Security and Medicare taxes. This is a meaningful tax benefit: your child earns income, you deduct it as a business expense, and no payroll taxes are due. The child will owe income tax only if their total income exceeds their standard deduction ($16,100 for 2026 for single filers) — which it won’t for most part-time arrangements.

Tax Implications of Paying Your Child

Once your child has genuine earned income, the tax picture is straightforward and favourable:

• Income tax on the child’s earnings: Children are taxed at their own rate, not the parents’. For 2026, a dependent’s standard deduction is the greater of $1,350 or their earned income plus $450 — capped at the regular $16,100 single-filer amount. A child who earns $7,500 from legitimate work therefore has a $7,950 standard deduction and owes zero federal income tax. You should still file a return to document the income.
• The “Kiddie Tax” doesn’t apply to earned income: The kiddie tax (which taxes a child’s unearned income at the parent’s rate) applies only to investment income, not wages or self-employment income. Earned income is always taxed at the child’s own rate.
• Do you pay taxes on chore money you pay your children? If the payments are genuine allowances for household chores (not wages for business services), no employment taxes apply. But then you also cannot use the payments as the basis for a Roth IRA contribution.

Setting Up the Roth IRA Once Your Child Has Legitimate Earned Income

Once your child has documented earned income from a legitimate source:

1. Open a custodial Roth IRA at Fidelity, Schwab, or Vanguard (all charge $0 to open and maintain)
2. Contribute up to the lesser of: the child’s earned income for the year, or the annual contribution limit ($7,500 for 2026)
3. The parent can make the contribution — the child doesn’t need to contribute their own money. The rule is that the child earned the income, not that they personally deposited it.
4. Keep documentation of the child’s earned income (W-2, 1099, or a simple self-employment income log for informal self-employment)

Frequently Asked Questions

Can I pay my child to clean our house and contribute to a Roth IRA?

Standard household cleaning duties (dishes, vacuuming, their own room) generally don’t qualify as earned income for Roth IRA purposes. However, if your child regularly cleans your home-based business office or commercial space as part of your business operations, and you compensate them at a reasonable market rate, that arrangement could qualify — with proper documentation and payroll.

What age can a child start a Roth IRA?

There is no minimum age. Any child with earned income can have a custodial Roth IRA. Child actors, musicians, athletes, models, or children who do legitimate work for a parent’s business can start contributing from any age.

How much can a child contribute to a Roth IRA?

The contribution is limited to the lesser of the child’s earned income for the year or the annual Roth IRA contribution limit ($7,500 for 2026). If a child earns $2,500, the maximum contribution is $2,500.

Do I need a W-2 for my child to have a Roth IRA?

Not necessarily — self-employment income also qualifies. But you should be prepared to document the income with something: a W-2, 1099-NEC for freelance work over $600, or a simple record of earnings if the self-employment income is informal (like neighbourhood lawn mowing). The burden of proof that earned income existed is on the taxpayer.

Can my kid put chore money into a Roth IRA?

Not on its own. Money you hand your child for chores around your own home is a family transfer, not compensation — and a Roth IRA can only be funded against earned income. It does not matter whether you call it wages, whether you pay it weekly, or whether you keep a chart on the fridge. If the work is ordinary household help for your own family, the IRS does not treat it as a job, so it creates no Roth eligibility.

Is allowance considered earned income, or is it a gift?

Allowance is a gift, not earned income. That has two consequences worth knowing. The good news is your child owes no tax on it and you have no reporting to do — it falls far below any gift-tax threshold. The catch is that it does nothing for Roth IRA eligibility, because contributions are capped by earned income and allowance is not earned income.

If I hire my child to do yard work and pay them, does that count?

It depends entirely on who benefits from the work. Yard work at your own family home is a household chore, so no. But the same task can qualify in two other situations: if your child does it for other people — mowing a neighbour’s lawn, for example — that is genuine self-employment income and it counts. And if your child does it for a real business you own, such as maintaining the grounds at a rental property, that can be legitimate wages, provided the work is real, age-appropriate, documented, and paid at a rate you would pay a stranger.

Can I pay my young grandchild for pet sitting or helping outside so she can open a Roth IRA?

Split the question in two, because the answer differs. Pet sitting for other households is self-employment income and does count, at any age, as long as the child genuinely does the work and you keep a simple log of dates, jobs and amounts. Chores done for you around your own home do not count, for the same reason a parent’s chore payments do not. Be realistic about very young children too: the work has to be something the child can actually perform, and arrangements involving a five-year-old invite scrutiny precisely because so little bona fide work is plausible at that age. One thing that often surprises people: the contribution money itself does not have to come out of the child’s pocket. You can gift the cash to fund the account. It is the earned income that must be genuinely hers, and the contribution simply cannot exceed it.

What kinds of home businesses can legitimately pay my kids?

Any real trade or business qualifies — rental property, e-commerce, consulting, photography, freelance work, farming. What matters is the role, not the industry. Jobs children plausibly do include modelling for product photography, packing and shipping orders, filing and data entry, cleaning an office or turning over a rental between tenants, and basic property upkeep. Business structure changes the tax treatment: if the business is a sole proprietorship or a partnership in which both partners are the child’s parents, wages to a child under 18 are exempt from Social Security and Medicare tax, and wages to a child under 21 are exempt from FUTA. If the business is a corporation, or a partnership that includes a non-parent partner, all of those taxes apply regardless of the child’s age.

Do chores count as a job?

Not for tax purposes, when the chores are for your own family. That is the distinction that trips most people up: “job” in everyday language means responsibility and effort, but “employment” in tax language means work performed for a trade or business, or services sold to someone outside the household. Chores are the first and not the second, however diligently they are done.

Can parents make their children do chores without paying them?

Yes — household chores are part of family life, not employment, so no wage rules attach to them. The distinction matters in the other direction as well: if you decide to employ your child in your business and claim their wages as a business deduction, the pay has to be real. Money that is announced but never actually leaves your account, or is immediately taken back, is not compensation, and treating it as such is exactly the arrangement that fails on audit. Genuine child-labour rules for hours and hazardous work are a separate matter, set by the Department of Labor and by your state.

How much can my child actually put in?

The lesser of their earned income for the year or the annual limit, which is $7,500 for 2026. Earned income is almost always the binding constraint for a child: if they earned $1,800, the maximum contribution is $1,800, not $7,500. Because limits change every year, confirm the current figure on irs.gov before you contribute.

Grandparents run into a slightly different version of all this, which I covered in can grandparents open a Roth IRA for a grandchild.