Dependent capital gain and dividends

[kirkandjuliefisc]

Hello, my child has capital gains and dividends from a fund. They are currently a student in college and work part-time. Would it be advisable to only withdraw money from that account in increments spaced out each year for college or is it o.k. to withdraw the whole amount in one year? What kind of effect does that have on their taxes? They are still our dependent. Is there an earnings limit we should consider? Thank you.

[RobertB4444]

It's impossible to be sure what kind of impact pulling all of the money out at once would have on your student's taxes.  In order to pull the money out the folks managing the investments will have to sell off everything.  When they sell the investments they will either make money or lose money.  If the sale of investments makes a profit it could mean a big tax bite for your student.  If the sale of investments loses money it won't make much difference to them at all.

In general, pulling it out over time lets the folks who are managing your money do a better job of making it work for you.

@kirkandjuliefisc