If you have a child or grandchild who will be working this summer – you might want to consider contributing to a Roth IRA for them. You can contribute up to $6,000 in 2019 – but not more than the child earns. So, if the child works a job and earns $3,000 this year – the maximum you could contribute would be $3,000. Any amount that you contribute does count toward your $15,000 gift tax exclusion for 2019. You have until April 15, 2020 to fund the Roth for the child’s 2019 earnings.
Contributions to a Roth IRA are not tax deductible in the year that you make the contribution, however, the earnings they have grow tax free and withdrawals after the child reaches 59 ½ are tax free. Distributions prior to that age are tax free to the extent that you withdraw your original contribution and not the accumulated earnings.