Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
DonC1
Returning Member

Custodial Accounts for Grandchildren

We have Custodial accounts with EDJones for each of the grandchildren.  I am listed as the Custodian and (Grandchild) under the age of 21.  The statements and Dividend reports are sent to me.  Am I responsible for paying taxes on the dividends earned in those accounts?

Thank you,

Don

5 Replies
macuser_22
Level 15

Custodial Accounts for Grandchildren


@DonC1 wrote:

We have Custodial accounts with EDJones for each of the grandchildren.  I am listed as the Custodian and (Grandchild) under the age of 21.  The statements and Dividend reports are sent to me.  Am I responsible for paying taxes on the dividends earned in those accounts?

Thank you,

Don


No.   If the child is required to file a tax return they go on the child's own tax return.

 

(Custodial accounts normal end when the child becomes an adult at age 18.)

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
DonC1
Returning Member

Custodial Accounts for Grandchildren

Thank you for your reply.  If the children are still very young, 1-10, and do not file, then would I have to enter the values on my taxes?

Thank you,

Don

macuser_22
Level 15

Custodial Accounts for Grandchildren


@DonC1 wrote:

Thank you for your reply.  If the children are still very young, 1-10, and do not file, then would I have to enter the values on my taxes?

Thank you,

Don



@DonC1 wrote:

Thank you for your reply.  If the children are still very young, 1-10, and do not file, then would I have to enter the values on my taxes?

Thank you,

Don


No.   It is not your income - it is the child's income.   You are just the adult custodian of the account.   If the income exceeds $1,100 then the child must file a tax return.

 

2020 Filing requirements for dependents.

Single dependents— (Not age 65 or older or blind)

You must file a return if any of the following apply.
1. Your unearned income was more than $1,100.
2. Your earned income was more than $12,400.
3. Your gross income was more than the larger of—
a. $1,100, or
b. Your earned income (up to $12,050) plus $350.

Or Dependent had net earnings from self-employment of at least $400. 

However, if any tax was withheld, then Dependent might want to file anyway to get a refund of the tax withheld.

Also, a person that CAN be a dependent cannot claim him/her self and must check the box that says that another taxpayer can claim them (whether or not that taxpayer actually claims him/her).

Note: your state filing requirements might be different than the federal.




**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Critter-3
Level 15

Custodial Accounts for Grandchildren

LOOK at the tax reporting form ... if the SS# is the child's then it goes on the child's return IF the child is required to file.   If you don't claim the child as a dependent   then you need to give the child's paperwork to the person who is claiming the child so they can decide if the child has to file a return   OR  add  the child's income on their return.  

Hal_Al
Level 15

Custodial Accounts for Grandchildren

If each child's yearly income, including any capital gains, is more than $1100, the child must file a tax return.  The parent can sign the return, for the child. 

 

There is an exception; If the child's 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 the parent's return (not the grandparent-custodian), using form 8814.
But, it is usually best for the child to file a separate return, as qualified dividends and capital gain distributions could be taxed at a higher rate on the parent's return. 

Privacy Settings
v