Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (20) | Ignore Thread Prev | Next
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121095  
Subject: Re: tax returns for minors? Date: 12/16/2006 1:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
I have a 13 year old and a 10 year old. I opened an UGMA account for each of them ... As my 13 year old's account approaching 6 figure, ... Any advice?

Raise them well. At 18 (21 in a couple of states) the money will be theirs to do with as they please. A 6 figure sum is a lot of money to drop on an 18 year old.

--Peter

PS - I'd immediately start reporting the income from this money on their own return. The only benefit of reporting it on your own return is a minor bit of simplicity. If you are subject to any AGI-based phase outs, you are increasing your family's taxes by including their income in your AGI.

And because you're asking the question, I'd hazard a guess that you are not reporting their income correctly on your return - using form 8814 - and taking advantage of their standard deduction and a little bit of the 10% tax bracket. If you've made that mistake and are in the 28% bracket, you've probably overpaid your taxes by a few hundred dollars each year. (More if your in a higher tax bracket, less if you're in the 15% bracket.)

I don't think you can reverse your election to report your children's income on your return, but you could amend your returns for the last three years to correct your calculation of your tax. That might get you $1000 or more back from the IRS. Certainly enough to be worth looking into.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (20) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Post of the Day:
Value Hounds

Mylan Transitioning from Generics
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement