Do I have to pay taxes on a Roth IRA that is opened with Wedding Gifts?
I am a 29 year old teacher that will be getting married in July. I was hoping to use some of the remaining money from the wedding to open up a Roth IRA.
I am not a financial professional and have always heard that money going into an IRA is post-tax. Since I have not paid taxes on the wedding income, do I have to pay further taxes on the money before I open up the Roth IRA?
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You must have $x of taxable income that year in order to make a contribution of $x to IRA for that year. It doesn't matter where the actual "money" that you contribute comes from -- for tax purposes, all that matters is the total amount of taxable income and the total amount of contributions; how you move your money around or divide it up is irrelevant.
Both of the other answers are correct and good answers, but I think neither directly answers your question.
No, you do not need to pay additional taxes on the wedding gifts simply because of the fact that they are going into a Roth IRA. Similarly, if you put them into a traditional IRA, that amount would be deductible (assuming you met the other criteria, including minimums and maximums of earned income, in both cases). The act of putting money into a Roth IRA is not what makes it taxable; its original source is. Roth simply does not reduce your current taxes any, whereas a traditional IRA would.
The seeming exception to this is when rolling money from a tax-deductible source to a non-tax-deductible destination, such as transferring money from a Traditional IRA or 401(k) to a Roth IRA or 401(k). Then, the taxable event is really the distribution from the Traditional IRA or 401(k), not the deposit into a Roth IRA or 401(k), though of course if you rolled a 401(k) over to a traditional IRA it would not be taxable.
You are a teacher with income. Presumably, between you and your spouse-to-be, more than 00. That's all that matters. Unless, of course you make "too much money" (i.e. 4K or over). That's another story.
The actual deposit can be from any source. The example we often give is that a teenager with legitimate income can have a Roth, up to the income or 00, whichever is lower, funded by gifts from a parent, or from savings. They don't need to turn over the money they made.
The money you are getting is a gift, and it's your money to do what you wish.
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