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ajm2014
New Member

I have a form 1099-B that was set up my grandfather and my name is on there with UTMA after it and my social listed as the recipient. How to I go about dealing with this?

 
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5 Replies
SeanE1
New Member

I have a form 1099-B that was set up my grandfather and my name is on there with UTMA after it and my social listed as the recipient. How to I go about dealing with this?

The Uniform Transfers To Minors Act (UTMA), are custodian accounts that are set up by adults for minors.  When the minor reaches age 18-21, depending on the state, the beneficiary (you), take control of the account. The account is now your responsibility to manage and if you file a tax return you are required to include the interest that is shown on your 1099-B.  The IRS gets 1099-B statements for every taxpayer, and when we file our tax returns, the IRS matches what they have with what we report on our tax return. To report this on your tax return using Turbotax, please do the following:

• Sign into Turbotax and open your tax return

• Select the Federal Taxes tab at the top of your screen

• Now select Wages and Income

• Scroll down the page to the “Investment Income” section

• Select “Start” to the right and go through this section entering the information from your 1099-B. 

I have a form 1099-B that was set up my grandfather and my name is on there with UTMA after it and my social listed as the recipient. How to I go about dealing with this?

If the beneficiary is still a minor who is responsible for making sure the taxes are filed?  In this situation for example, the grandfather sets up an UTMA for the grandchild, the grandchild's parents are not involved, and there are taxable realized gains in the account but no one files a tax return.  Who would be responsible for filing that return and paying penalties and interest; the minor, the grandfather or the unaware parents?

 

Also, in this scenario would income over $2,200 be taxed at the parents rate or the grandfather's rate?

DianeC958
Expert Alumni

I have a form 1099-B that was set up my grandfather and my name is on there with UTMA after it and my social listed as the recipient. How to I go about dealing with this?

The child is responsible for reporting the income from the account on their own tax return.  If the child's income is solely from investments and less than $1,100, they are not required to file a tax return.

 

If the amount they have as income from investments exceeds $2,200 the income will be taxed at the parents tax rate.

 

The Kiddie Tax is the tax levied on the portion of the child's unearned income that exceeds $2,200. Children who only had earned income from a job or self-employment, don’t make enough money to be required to file, or are filing jointly with their spouses are exempt from the Kiddie Tax.

 

There are conditions where the parents can report the income on their tax return.

 

All these conditions must be met:

  • Your child was under age 19 (24 if a full-time student) as of January 1, 2020;*
  • Your child's income was solely from interest and dividends (including capital gains distributions and Alaska Permanent Fund dividends) and is less than $10,500;
  • Your child is required to file (that is, their income exceeded $1,100);
  • Your child is not filing a joint 2019 return;
  • No 2019 estimated tax payments were made for your child (including 2018 overpayments applied to 2019 estimated tax)
  • No federal taxes were withheld from your child's income; and
  • You're either filing a joint return with your child's other parent or you're the parent who is qualified to include your child's income on your return (for example, you're the custodial parent or you and your spouse are filing separately and you have the higher taxable income).

@user314

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I have a form 1099-B that was set up my grandfather and my name is on there with UTMA after it and my social listed as the recipient. How to I go about dealing with this?

If the child sells a stock for a capital gain, but still has combined income and capital gains below $1,100.  Would the child be required to file a tax return?  Thank you.

ThomasM125
Expert Alumni

I have a form 1099-B that was set up my grandfather and my name is on there with UTMA after it and my social listed as the recipient. How to I go about dealing with this?

The IRS will assume that the full amount of the stock sale is the income from sales. So, if the sale amount puts the child over the $1,100 of unearned income, you need to file a tax return to report the cost of the sale. 

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