Year-End Tax Strategy: A Child IRA Can Help Reduce Your Tax Liability

As the end of the year approaches, you should be asking yourself what tax strategies you might be missing out on. Depending on your situation, there are many different ways to reduce taxes. The best person to ask about this is your tax advisor. It helps, however, if you go into that meeting with specific questions. If you have children, one question you might consider asking is how establishing a Child IRA could help reduce family taxes and whether you’re eligible to take advantage of this underutilized benefit.

Current contribution limits for Child IRAs

A Child IRA is not much different from an IRA you set up for an adult. These vehicles provide opportunities for you to give a gift to your child. For parents who operate businesses, the Child IRA can become a valuable generational wealth transfer tool.