Can I report my 22yo son's 1099-DIV from a Custodial Account on my tax return if he must file his own return due to his earned income? (Want to keep Custodial secret)

[AlanT · Accepted solution]

Unfortunately, if your son must file a tax return and the account is in his name, he must include it on his income tax return.

The IRS will match his return with information submitted by others regarding his dividends and income.  If the information does not match he will be forced to correct it later.  

[spillanewkw]

Thank you, Alan! Does that apply even if the account is a Custodial Account and not in his name alone?

[macuser_22]

I think you need to talk to the account trustee.  The account should be in your sons name ans SSN only at this point
A "custodial" account ends when the child becomes an adult under state law.  A 22 year old is an adult in all states.
The account trustee should have ended the custodial account when  the child became an adult.

quote
"Under the laws that govern custodial accounts, including the Uniform Transfers to Minors Act (UTMA), account custodianship ends and the beneficiary becomes eligible to assume control of the account at a specified age—typically 18 or 21, depending on the state."
end quote

[spillanewkw]

This is VERY interesting and thanks for sharing it! That was my impression too, although I didn't know the exact age custodianship would end. So I contacted the Trustee (Vanguard) and they assured me we can keep the Custodial Account as is for as long as we want. Indeed, they said some investors still have Custodial Accounts for their kids who are in their 40's! I was surprised by that, but that is what we were told. We don't intend to keep it this way until my son is 40, but we hoped we could keep it secret for 1 more year. In years past, we simply reported the Custodial 1099-DIV on our tax return via Form 8814. In 2018, he graduated college and has earned income from his job so he MUST file his own tax return this year. The issue for us was:  Do we have to tell him about the Custodial Account so he can report it on HIS return, or can we keep it secret for 1 more year and report it on OUR return on grounds it is still a Custodial Account and not in his name alone? Also, he was still a "dependent" for about 9 months of 2018 - not sure if that changes anything.

[macuser_22]

Depends on the state ans state law.

See this article:

<a rel="nofollow" target="_blank" href="https://www.nolo.com/technical-support-main/online-will-uniform-transfers-minors-act.html">https://w...>

[spillanewkw]

Thank you, macuser, for that info and link. I checked the Nolo site with that link and CA (our state) says UTMA Custodial relationship ends b/t ages 18-25. So I have no idea why Vanguard told us the Custodial Account could stay intact forever. I will re-contact them about when our Custodial Account must be transferred to the recipient - it was over a year ago when I discussed it with them. This sure does complicate our original issue, but we are very grateful for everyone's help here so that we can get this right.

[macuser_22]

I live in CA and we had custodial accounts for our grandchildren and were required to turn the account over to them when they turned 18, the age of emancipation in CA.   (I believe the age range 18-25 must be specified at the time the account is established and if not specified, as it was not on our case, defaults to the lowest age.)

[spillanewkw]

Wow! Thank you again, macuser! Can't recall if we specified an age, and if it defaults to 18, then something is seriously amiss. Did your Trustee automatically do the account transfer and retitle? Our Trustee not only did NOT do it automatically, but also gave us wrong info about it so we thought we were fine when we're probably not fine. Again, thank you for explaining all this and for opening our eyes!