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UTMA Taxes

Forum|Forum|2 years ago
April 2, 2024
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I opened an Uniform Transfers to Minors Act (UTMA) account for my kid in 2023 through Fidelity. I was under the assumption that my kid would be responsible for all taxes incurred on the account. When I imported my Fidelity info into TurboTax, it also included ~$20 of dividend from the UTMA account. That is the only income my child has earned. Am I ok to remove that UTMA dividend from my taxes?

Thanks.

Best answer by Hal_Al

You do not report his/her income on your return.* If it has to be reported, at all, it goes on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2023 if he had any of the following:

Total income (wages, salaries, taxable scholarship etc.) of more than $13,850 (2023).
Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution) of more than $1250 (2023)
Unearned income over $400 and gross income of more than $1250 (2023)
Household employee income (e.g. baby sitting, lawn mowing) over $2600 ($13,850 if under age 18)
Other self employment income over $432, including money on a form 1099-NEC

*If his only income is from interest and dividends, Alaska PFD or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on your return, using form 8814. Enter at Less common income / Child's income.
But, it is usually best for him to file a separate return, as qualified dividends and capital gain distributions could be taxed at a higher rate on the parent's return.

It's probably best if you don't try to import the UTMA 1099-Div, but enter it manually, if and when needed.

M

Mike9241

yes. in this situation

but be aware under current tax law if the child has more than a specified amount of unearned income and depending on their age there can be what is referred to as the Kiddie tax

https://www.irs.gov/taxtopics/tc553

Hal_AlAnswer

You do not report his/her income on your return.* If it has to be reported, at all, it goes on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2023 if he had any of the following:

Total income (wages, salaries, taxable scholarship etc.) of more than $13,850 (2023).
Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution) of more than $1250 (2023)
Unearned income over $400 and gross income of more than $1250 (2023)
Household employee income (e.g. baby sitting, lawn mowing) over $2600 ($13,850 if under age 18)
Other self employment income over $432, including money on a form 1099-NEC

*If his only income is from interest and dividends, Alaska PFD or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on your return, using form 8814. Enter at Less common income / Child's income.
But, it is usually best for him to file a separate return, as qualified dividends and capital gain distributions could be taxed at a higher rate on the parent's return.

It's probably best if you don't try to import the UTMA 1099-Div, but enter it manually, if and when needed.