Any special reporting for custodial account in tax return

Forum|Forum|4 years ago
March 22, 2022
1 reply
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Hello -

I opened a UTMA Custodial account for my son and deposited cash from me and my wife (15k per person) last year - 2021. The account generated a total interest of 9 cents and I see a 1099 form generated in the account. I plan to add this account interest in the interest income section of our (mine and my wife's) married filing jointly return where we claim my son as a dependent (he does not have any other income). There is no other income generated in that custodial account and I have not invested the money yet. Am I doing the tax return filing correctly or is there any additional filing requirement for having a custodial account?

Thanks,

Best answer by Vanessa A

Good morning - Just want to reconfirm what you meant in the answer

So I won't be filing a tax return for my child correct?

Sorry for reconfirming and thanks a lot for your help!

That is correct. You will not be filing a tax return for your child due to this gift.

PattiF

If your child's only income is unearned and doesn't exceed $1,100, it doesn't need to be reported. No return is needed for the child.

But, you also don't need to file a return for nine cents. The IRS guideline is to round amounts to whole dollars on a return. This amount would be rounded to zero and there is no requirement to file a return for these few cents. The IRS will not be looking for this amount to be reported.

Here is an IRS Topic No. 533 on a Child's Investment and Other unearned Income when the income from the UTMA is higher.

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pius_ttaxAuthor

Thank you very much. I was doubtful if I should report the 9 cents and your answer confirmed it. I will skip it entirely in the return.

Thanks again,

pius_ttaxAuthor

Hello again -

I am in the process of preparing the tax return for tax year 2023 and I see my child's custodial account generated $400 in interest. I am confused on whether this needs to be included in my return or if there is any filing requirement for him separately. Can you please help clarify ?

Thanks in advance.