What's in this guide
If your kid earns money selling art, they've already cleared the single biggest hurdle to investing for retirement. A Roth IRA has no minimum age — it only cares that the money came from work. That means a 9-year-old with a gallery of pixel art can start compounding decades before most adults open their first account.
This playbook walks through the whole thing: what the account really is, how much your child can put in, how to open one, and the tax forms a self-employed kid may need. It's written for parents who want to get it right the first time.
1. What a custodial Roth IRA actually is
"Custodial Roth IRA" isn't a special type of account in the tax code. It's an ordinary Roth IRA that belongs to a minor. Because a child can't legally sign a brokerage contract, an adult — usually a parent — opens and manages the account on the child's behalf as custodian.
Three things make this arrangement special:
- Your child owns the money. You're the steward, not the owner. Once your child reaches the age of majority in your state (commonly 18, sometimes 21), the account becomes theirs to control outright.
- It's a real Roth IRA. Growth is tax-free, and qualified withdrawals in retirement are tax-free too. The same rules that apply to your Roth apply here.
- The custodian can't use it. Funds must be for the child's benefit. You can't dip into it for household expenses.
Kids are usually in the lowest tax bracket they'll ever be in. Paying tax now (Roth) and letting decades of growth come out tax-free is the better bet for almost every young earner.
2. Why your kid qualifies: the earned income rule
To contribute to any IRA, the account owner needs taxable compensation — "earned income." For a young artist, that's the money they make from selling their work.
What counts as earned income:
- Wages, salary, and tips from a job.
- Net self-employment income — for a kid selling art online, that's sales revenue minus reasonable business expenses (supplies, software, shipping, platform fees).
- Some other amounts, like certain taxable scholarships or union strike benefits.
What does not count: allowance, birthday money, gifts, dividends, interest, or proceeds from selling a toy on the driveway. Those are not earned income, so they can't be the basis for a contribution.
You don't have to use your child's actual dollars. As long as your child has enough earned income, you can fund the contribution from your own account. Many parents treat it as a match: for every dollar their kid earns and saves, the parent contributes a dollar (up to the earned income total). It's a powerful, low-cost lesson.
3. How much can your child contribute?
The limit is the lesser of two numbers:
- Your child's earned income for the year, and
- The annual IRA contribution limit — $7,500 for 2026 (up from $7,000 in 2025).
So a child who earned $600 can contribute up to $600 for the year. A child who earned $20,000 can contribute the full $7,500. The IRS limit is indexed to inflation, so confirm the current year's number in IRS guidance before you fund.
Two more rules worth knowing:
- Deadline: contributions for a tax year can be made up to the federal filing deadline — generally April 15 of the following year.
- Income phase-outs: Roth eligibility phases out at higher incomes, but that test uses the child's income, not the parents'. A kid earning a few thousand dollars is nowhere near the threshold, so your household income doesn't disqualify them.
4. Opening the account, step by step
- Confirm and document the earned income. Keep a simple ledger of sales, plus any 1099s or platform statements. You'll want this if the IRS ever asks.
- Pick a custodian. Many major brokerages offer custodial (or "Roth IRA for minors") accounts. Compare fees and fund choices.
- Open it as the custodian. You'll provide your child's Social Security or ITIN number and date of birth, plus your own details.
- Fund it by the deadline. Contribute up to your child's earned income, up to the annual cap.
- Invest it. Cash sitting in the account won't grow much. A low-cost index fund or target-date fund is a common starting point — but the choice is yours (and worth a conversation with an advisor).
- Keep records. Store contribution confirmations and your income documentation together.
5. Funding it with art earnings
If your child sells art through Art4IRA, you'll get clean year-end statements summarizing sales for the tax year — exactly the documentation a custodial Roth needs. Use the net earnings figure (revenue minus fees and expenses) to set the contribution ceiling, and keep the statement on file.
Some families make it a ritual: at tax time, sit down together, total up the year's art income, and move that amount into the Roth. It turns a dry financial task into a visible milestone for the kid who did the work.
6. The tax paperwork you'll actually touch
A custodial Roth IRA is a great home for art earnings, but it doesn't erase the child's obligations as a self-employed earner. Here's the short version:
- Self-employment tax. Once net self-employment earnings reach $400 for the year, your child generally needs to file a return and pay Social Security and Medicare tax on those earnings (Schedule SE).
- Income tax. A dependent's standard deduction generally shelters modest earned income, so a child earning a few hundred or low thousands of dollars often owes little or no federal income tax — but the return may still be required because of self-employment tax.
- The kiddie tax (the special rule that taxes a child's investment income at the parents' rate) applies to unearned income like dividends and interest — not to the earned income that funds a Roth.
- 1099s. Payment platforms may issue a Form 1099 for sales above a reporting threshold. Those thresholds have shifted in recent years, so check current IRS guidance rather than assuming a specific number.
- Excess contributions. If you put in more than your child earned, the excess is taxed 6% per year until it's corrected. When in doubt, contribute less and top up before the deadline.
For a detailed walkthrough of the earned income rules and forms, see our companion guide, Kids & Earned Income: IRS Basics.
7. A worked example
Say Maya is 10 and earned $1,200 selling digital art last year. Her parent contributes the full $1,200 to a custodial Roth IRA and invests it.
| Starting contribution (age 10) | $1,200 |
|---|---|
| Assumed annual return | 7% (illustrative only) |
| Years until age 65 | 55 |
| Potential value at 65 | ~$49,600 |
One year of art sales, left alone, could grow nearly 40× by retirement — and none of that growth would be taxed if withdrawn as a qualified distribution. Want to see the effect of adding a little every month? Try the retirement calculator.
8. Common mistakes to avoid
- Contributing more than earned income. The most common and most expensive error. Track the numbers.
- Counting allowance or gifts. Only earned income qualifies.
- Treating it as a family account. The money belongs to the child.
- Leaving it in cash. Funding is step one; investing is step two.
- Missing the deadline. Contributions for a tax year close at the filing deadline the following April.
- Skipping the CPA. Not always necessary — but once self-employment income crosses a few hundred dollars, a short conversation is cheap insurance.
Ready to put art earnings to work?
Art4IRA gives kids a gallery, handles the payments, and produces the year-end statements you'll need to fund a custodial Roth IRA.
Create a Free AccountThis guide is educational and does not constitute tax, legal, or investment advice. Contribution limits, thresholds, and rules are set by the IRS and can change; verify current figures at irs.gov or with a qualified professional. Projections are illustrative and not a guarantee of future results. Art4IRA is not a registered investment advisor.