Parenting · Roth IRA · Taxes

Child Tax Returns – 2021

One of the joys of being a parent is teaching my six children about their needy Uncle Sam. This year, I helped four of them file taxes, two of them for the first time. We used a variety of methods to file their taxes and had some good discussions along the way.

Número Uno

Our oldest child is in her sophomore year of college two time zones away. Since she’s an adult, daddy’s no longer responsible for filing her taxes. But she’s a busy college student and I really don’t mind helping her out.

In the past, we’ve used TurboTax to file her taxes, mostly because it was free for someone with little income, because it remembered last year’s details, and because we didn’t have to manually upload one of her W-2s.

A couple things were new this year. First, she received a 1099-Q from Virginia 529 because I had made a distribution to her during 2021. She didn’t pay any tax on the distribution, but if she had it would have been at her lower tax rate instead of at my higher rate.

Second, this is her first time filing taxes in two states for the first time. She is still a resident of Virginia while she’s at school, so the money she earned at school is taxed by both states. She’ll get a credit from Virginia for tax paid to the other state. But her Virginia tax will be higher so she’ll pay more than if she was a resident.

I found TurboTax to be more annoying this year than it was last year. Like last year, there were multiple attempts to upsell us to a paid version: three that I counted. Her tax return was super simple, so why pay. What was super annoying this year was how the CreditKarma upselling. When specifying how we wanted to receive her refund, it took multiple clicks to avoid creating a Credit Karma Money account, something “recommended” by TurboTax. Wat? And then at the very end, the dark pattern of tricking users into signing up for Credit Karma was frustrating. 

Convenience aside, next year I’m going to help her file somewhere else.

Another upsell to an Intuit product?
Don’t click continue!
Yes, I hate free benefits!

Número Dos

Technically, we didn’t have to file for my second child because (a) her income was below both the federal and state thresholds and (b) because she was exempt from withholding, she had no refund coming. But we filed to ensure we could keep up contributing to her Roth IRA. We skipped filing her Virginia state tax return because she didn’t have to file.

We also used TurboTax, with the same experience as above. She had three W-2s (long story) and only one was auto-importable by TurboTax. Same experience with TurboTax and I’ll probably use something else next year, even if we have to manually enter in W-2 info.

I had the most interesting conversations with my second daughter. We talked about FICA taxes and how she had earned enough to earn the maximum four credits of Social Security credit this year, and how she had another thirty six to go before she qualified for benefits. We talked again about how contributing to her Roth IRA was a great idea, especially with me matching her contributions. There were several hastily scrawled diagrams on scratch paper to explain things and I hope I didn’t overwhelm her. She seemed genuinely interested in learning more about the process.

Número Tres

This was the first time my third child filed. He filed because he wanted to open a Roth IRA, not because he was required to file them. He had W-2 income from a summer job, and self-employed money from mowing lawns for neighbors. He’s under sixteen, and I knew from previous experience that he would have to mail his first tax return and couldn’t file electronically. We skipped TurboTax and went straight to FreeFileFillableForms.

He was exempt from withholding and his self-employed earnings were less than $400 so he owed no self-employment tax.

A few days after mailing in his first tax return, I opened his Roth IRA account up at Fidelity. I opened the Roth IRAs for his older sisters at Vanguard which required sending in a paper application. I wanted to try something different for comparison. Overall it was a good experience and didn’t require a paper application. We put everything into FZROX, Fidelity’s zero-fee total market index fund.

Número Cuatro

Number four had only cat-sitting and lawn-mowing. She’s turning thirteen this year, which means she is still enrolled in the Bank of Dad (with its 5%-per-month interest) and not yet eligible for a Roth match from me. However, I felt like filing for her would (a) be a good learning experience, (b) make it easy to file online in the future since it won’t be her first return and (c) she could still open and contribute to a Roth, even if I wasn’t matching it.

This time, instead of creating another FreeFileFillableForms account, I instead just downloaded the form PDFs and filled them out on the computer. Even with a Schedule C for self-employed income, it was pretty simple. She was below the $400 threshold for self-employment tax.


All the tax returns for the kids are now filed. TurboTax annoyances aside, it went pretty smoothly. Next up is my own return, but I’m still waiting on a couple brokerage documents to wrap that up. Future post.

Hasta luego!

6 thoughts on “Child Tax Returns – 2021

  1. Intuit is pure evil. Those screenshots trying to dupe you into creating that credit karma account make my blood boil.

    I’m glad you had a good experience overall doing taxes with your kids. I should make the process more interactive for my kids rather than just doing it for them.

    We’re also a fan of the Roth IRA at Fidelity for the FC1, also invested in FZROX (+ FZILX).

    1. Thanks for the tip on FZILX. That will be another good fund to get them into. I was pretty happy with how easy it was to setup their Roth IRAs at Fidelity. Fidelity is a great provider, but I wish they’d stop trying to sell me on their wealth advisors.

  2. I agree trying to dupe you into setting up a new account with CreditKarma is just plain wrong, especially with kids who are just getting started with filing returns. I do my kid’s taxes since his income is only distributions from his UTMA and know how to easily spot these things but I don’t like the targeting of kids (young adults).

    1. I agree that it’s shameful to target young adults. I suspect my kids are more financially savvy than many of their peers, but I could easily see them getting duped.

  3. Nice! Upsell city. I have not even done my taxes yet!

    Glad to see you are still cranking it out over here! As much as I would like to blame my 10 months old for my hiatus, my wife took a position in Indiana, so the last several months have been busy. Hope you are well.


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