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Financial Planning / Tax Strategies


Subject:  Re: UGMA and Taxes? Date:  1/17/2000  8:31 PM
Author:  Kimbers Number:  25323 of 127985

Thank you ... to be perfectly honest, I hadn't even considered the possibility that someone else might contribute, given the current family monetary capabilities. However, it won't always be that way, I hope.

I intend to keep earned income to a minimum anyway, so informing the parents of that amount doesn't really bother me.

-- Kimberly

<<I too, would be interested in knowing about this. My husband and I are setting up custodial accounts for our nephews. However, we don't want to have to keep the parents fully informed as to how much money is in those accounts.>>

It's not the MONEY in the account that's's the EARNINGS of the accounts (dividends, interest, and capital gains/losses) that are important. And you'll certainly want to make the parents aware of that information.

<<What responsibilities do we have for keeping them informed if the earnings are well below the ~$600 minimum for taxes?>>

But how about if there are 20 other people out there that feel like you do. And each of the 20 other custodial accounts earn only a measly $100? Add 'em all up and a return will be required. And if one isn't filed, the parents will get a lovely surprise in the form of a notice from the IRS (attached to a bill for taxes due). Not a pretty sight.

<<Does the tax return have to filed no matter what the earnings are, or only when tax becomes due?>>

Only when required. But again...what if there are more people out there with custodial accounts for the kid that feel exactly like you do? And nobody talks to anybody? Could be a problem.

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