[curious_19]

I'm 19 and in college. I spent the summer "being nanny" to my 4 month old nephew and working a few odd (cash only) jobs. Can I open a Roth IRA even though there's no paper trail? Is still "after tax" money when no taxes were taken out? Would I need to file taxes this year even though I'm a dependent on my mom's taxes?

[smoothy]

You have an income... you have to file taxes. That doesn't mean you will actually owe any taxes on it however. I doubt you will hit that threshold.

[ebaines]

The amount you can contribute to an IRA is the lesser of your taxable compensation or $5K. If you do not have any taxable compensation you can not legally fund an IRA. Be aware that the bank reports IRA contributions to the IRS, and in turn the IRS will note that it exceeds your wages as reported either on your 2010 income tax return or W2's from your employers. The penalty for over-funding an IRA is a 6% tax each year on the amount over-funded. For details, see: Publication 590 (2009), Individual Retirement Arrangements (IRAs) So don'yt tryt to fund an IRA if you aren't reporting any taxable wages.

However, if you are filing a tax return to report your wages as a nanny then you can fund an IRA, no problem, subject to the limits above. The fact that you are a dependent on someone else's return is immaterial (my own children funded their Roth IRAs when they were under 18). However, as a nanny you would be considered the employee of your sibling whose child this is - and as such your employer must report your income and withhold any federal/sate/local income tax as well as social security and medicaire tax on your behalf. Obviously you want to talk this over with your employer to make sure they are aware that this is what you want.