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

Prove earned income with employment agreements, work logs with timestamps, payment records, and a W-2. The IRS requires contemporaneous documentation—records created when work was performed.

How to Prove Your Child's Earned Income for Roth IRA

Quick Answer

To prove your child's earned income for a Roth IRA contribution, you need: (1) a written employment agreement establishing the work relationship, (2) work logs with timestamps showing when work was performed, (3) payment recordslike bank transfers or checks (not cash), and (4) a W-2 reporting wages at year-end. The IRS requires contemporaneous documentation, meaning records created when the work happens, not reconstructed later. A spreadsheet filled in at tax time is not sufficient.

What You Need to Prove

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

The child performed real work
They were paid for that work
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

Critical: A spreadsheet filled in at year-end is NOT contemporaneous. Server-timestamped records (like those from employkids) are far more defensible.

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

The IRS specifically looks for records created at the time of the event, not later. Here's why:

Spreadsheets can be edited anytime, with no proof of original creation date
Server timestamps prove when a record was entered and can't be backdated
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