Contributions To Your Children's IRA

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If you have an IRA for your son or daughter, you can contribute to it without penalty - up to a point. If your child runs short of cash in a given year, you can give them the $2,000 contribution - BUT - the $2,000 will count against the $10,000 per person, per year, limit that you can give in gifts without having to file a gift tax return with the IRS. ALSO, if you go over the $10,000 gift limit to one of your children in a given year, for any reason, the amount above $10,000 will be deducted from your "life time exclusion" of $675,000, which is the maximum amount you can pass on to heirs without incurring a tax liability.

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