How do I prove my child's earned income for Roth IRA?

What You Need to Prove

When the IRS (or your custodial Roth IRA provider) questions a contribution, they want to see:

1. The child performed real work
2. They were paid for that work
3. The payment constitutes earned income

The Documentation Package

1. Employment Agreement

A written document establishing the employment relationship:

• Job title and duties
• Pay rate
• Start date
• Signed by parent (employer) and child (or parent on child's behalf)

2. Work Logs with Timestamps

Records of each work session showing:

• Date of work
• Hours worked
• Tasks performed
• Server timestamp: Proof the record was created when work happened

Recordkeeping note: A spreadsheet reconstructed at year-end may carry less evidentiary weight. Server-timestamped records (like those from employkids) can strengthen an audit trail, but do not by themselves prove that the work or payment occurred.

3. Payment Records

Evidence that you actually paid your child:

• Bank transfers (recommended)
• Checks (keep copies)
• Venmo/Zelle/PayPal (creates paper trail)

Avoid cash: Cash payments are very hard to prove. Use traceable payment methods.

4. W-2

The official tax document reporting wages paid. This is what ties everything together, it's the official record the IRS and brokerage firms accept.

5. Roth IRA Contribution Memo (Recommended)

A document that connects the earned income to the Roth IRA contribution. Includes:

• Child's total earned income for the year
• Roth IRA contribution amount
• Confirmation that contribution ≤ earned income

Why "Contemporaneous" Matters

Records created at or near the time of the work are generally more credible than year-end reconstructions later. Here's why:

• Spreadsheets can be edited anytime, with no proof of original creation date
• Server timestamps record when each entry was created, which supports a timely-records position
• Reconstructed records at year-end look suspicious and are easy to challenge

If you're ever audited, "I made this spreadsheet in January" is much weaker than "Here are server-timestamped entries from each day they worked."

What Brokerages Want

When you open a custodial Roth IRA, most brokerages ask for the source of earned income. Common acceptable answers:

• Wages from family business
• Self-employment (babysitting, lawn care)
• Household employment

They typically don't ask for documentation upfront, but you should have it ready in case they ask, or in case the IRS questions the contribution.

Learn more: How to Document Paying Your Kids: The Complete Checklist

Sources

• IRS Publication 590-A: Contributions to Individual Retirement Arrangements
• IRS Recordkeeping: What Records to Keep