Is my son's bank account taxable

[dhimanc]

Hi 

My son is 16+ and I put in roughly $4000 into his account every year - that is roughly between $200 to $500 every month. Is this amount taxable? He is the first account holder (my wife's name is 2nd since he is not an adult). Does he have to declare this or pay tax on this?    

[xmasbaby0]

No, your son's bank account is not taxable.   He does not have to file a tax return to "declare" that he has a bank account.  If you are giving him money, that is a gift to him.  Gifts received are not taxable income.

The amount you mention does not rise to the level of requiring him to file to enter any interest received.   If he -someday--has a job or receives other taxable income and files a tax return, then any interest he gets from that account can be entered, but it sounds like it would be a small amount.  

And there is no tax deduction for you for the gift you are giving to him by putting money into his account.  Money given to family members or other individuals is not deductible.

[SwapnaM · Accepted solution]

No, the money that you deposit in his bank account is not taxable to him. If he earns interest on that money & it is above a certain threshold, then taxes come into the picture.

Dependent children who have earned income of more than $13,850 of income in 2023 typically need to file a personal income tax return and might owe tax. This threshold increases to $14,600 for 2024. Earned income applies to wages and salaries your child receives as a result of providing services to an employer or from self-employment, even if only through a part-time job.

The rules for filing a tax return change when your dependent child receives income from sources other than employment, such as investment income including interest and dividend payments. When the 2023 total of this type of income exceeds $1,250, then a return needs to be filed for your dependent child. This threshold increases to $1,300 for 2024.

You can choose to include it on your own return or they can file their own tax return.

For more Information: 

https://turbotax.intuit.com/tax-tips/family/tax-filing-requirements-for-children/L8ice6z0K 

https://turbotax.intuit.com/tax-tips/family/what-is-irs-form-8615-tax-for-certain-children-who-have-... 

@dhimanc Thanks for the question

[Mike9241]

you are making gifts to your son each time you put your money into his account. There are no income taxes on gifts. So long as the amount (fair value) of gifts of present interest you make to him each year are below the annual gift tax threshold currently $18,000 for 2024 no gift tax return is required (Form 709) 

[Opus 17]

The income level cited by the expert is wrong.

If a child dependent earns more than $1250 in interest, they may be required to file a return and pay taxes.  

https://www.irs.gov/individuals/check-if-you-need-to-file-a-tax-return

This is due to something called the "kiddie tax."  Basically, Congress doesn't want parents to be able to avoid paying taxes at their higher rate by putting money in their kids' names.  If the money is in a savings account or investment account, and earns interest, dividends or capital gains of more than $1250 per year, the child must file a return.

Note 1, that a child must always report income earned from working on a tax return in their own name, and if the child works and files a tax return, they must report all their interest, even if it is less than $1250.

Note 2, if the child does not work and their only income is interest and dividends, it is sometimes allowed to report that interest on a parent's return.  But this is not allowed if the child also works (see Note 1).