My parents opened up a custodial account in my kid's name when he was born and have been contributing to it for over a decade. We now need to access these funds to help pay tuition (high school). From a tax standpoint, what are things I need to be aware of if I need to withdraw 20K for the year? Will my kid be filing separately on these gains? Should we be doing tax loss harvesting? Etc.
Kid's Custodial account question re: withdrawals
byu/miketd1 intax
Posted by miketd1
1 Comment
OMG, “will my kid be filing separately on these gains” – yes, and they should have been filing all along on any interest, dividends, etc. earned by those funds.
Hopefully, the account is correctly set up and uses the child’s SSN for tax reporting purposes. It’s theirs for income tax purposes, even if they don’t have legal access to the funds until they reach age of majority.
So … look at the prior 1099s, make sure it has the child’s SSN on it, and see if you needed to be filing a return for them, and likely Form 8615 (the dreaded “kiddie tax” form).