Hello
I manage a UTMA account for my 8 year old grandson.
For tax year 2024 he had $173 in dividends of which $157 were qualified.
He had $2380 in capital gains split into $1491 ( short term) and $889( long term).
I believe he must file an IRS 1040 as well as an IRS 8615 form.
Do I have this correct?
Using tax software I get a tax due of $21.That seems to be a to low amount.
It’s my understanding that any amount over the child’s std deduction will be taxed at10%.
That would be “about” $2553-$1300=$1,253.00. $1253X.10=$125.30.
What am I missing? $21 versus $125?
I welcome any input.
Hit return to soon. No edit it seems.
Any amount over $1300 would be paid at the child’s bracket of 10%.
Why the discrepancy….?
1. Either the child files or the parent files the income.
2. I am adding $173 dividends + $2380 capital gains =$2,553 which is less than $2,600 required to file form 8615.
The parents return would file with Form 8814 instead. See Topic No. 553 Tax on a Child's Investment and Other Unearned Income (Kiddie Tax).