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Insulate Your Children From Tax Issues | Tax Tip of the Week | No. 100 July 6, 2011

Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , trackback

Ten Steps to Make Your Kid a Millionaire

This week we are going to paraphrase an excellent article that appeared in the June 27, 2011 issue of Forbes (author: William Baldwin).

The article outlines ten steps you can make which will make your children insulated from looming entitlement reductions and tax increases.

1. Don’t Overeducate: The master’s degree your son or daughter wants may be a bad investment.

2. Find a Cheap B.A.: In reality, graduates do well in life because of talent and ambition, not because of an expensive degree.

3. Fund a Roth: Tell your kids you will match every dollar they earn, provided that your dollars go into a Roth retirement account that they will not touch for 50 years.

4. Avoid Credit Card Debt: An average credit card balance of $8,000 at 15% interest rate will result in $60,000 finance charges over the lifetime of the debt.

5. Shop for a 529 Plan: Start saving for college expenses when your children are young.

6. Give Away Grandpa’s IRA: If, for example, your parent names you beneficiary of their IRA upon their death, you have the option to “disclaim” the inheritance.  By so doing, you can then name the next generation as beneficiaries of the IRA and therefore extend the tax-deferred accumulation of earnings.

7. Start Them Young: Children should learn about budgets – and limits – at an early age.

8. Give Stock: This strategy works well for children over age 24 (due to Kiddie Tax rules).  The idea is to give appreciated stock up to $13,000 to allow them to make a major purchase.

9. Put Your Kids In a House: The gift of a down payment on your kid’s first house can create a benefit of compounding over decades.

10. Hire Your Offspring: If you own a business, putting your children on payroll offers numerous tax saving opportunities.

To read the full article, click here.

Give us a call to discuss steps you can take based upon your situation and goals.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

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