The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Why Not Take Gains in UTMA?||Date: 2/8/2013 4:57 PM|
|Author: ptheland||Number: 117698 of 122474|
I'll agree with Ira, that bond fund dividends are ordinary dividends, not qualified dividends.
TT is probably coming up with the right number here. Those ordinary dividends from the bond fund are taxable, but apparently less than the $950 standard deduction.
As a recap, the first $950 of your child's income is not taxed. The next $950 is taxed at her tax rates. The ordinary tax rate on that part of her income is 10%. So if any of that income is long term capital gains or qualified dividends, it gets a special tax rate of 0%.
Income over that first $1900 will be taxed at your rate.
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