Filing requirements for child's 1099-B for UTMA to 529 transfer

[mpweis]

My daughter has had an UTMA for several years. I transferred it to a 529 in 2025. We received only a1099-B. In past years, we had received 1099-DIV for the UTMA. I am trying to find out the filing requirements for this 1099-B. Should my spouse (the custodian) and I include this on our MFJ tax return for 2025? There was an overall loss on the 1099-B.

[PII removed]

[DianeW777]

No, the Form 1099-B is reported on your child's tax return, even though there was a loss. The IRS will be looking at the 'Proceeds' and a cost basis must be reported to determine gain or loss.  This simply means to see if a tax return is required for your child, you must include the gross amount of proceeds with any other income such as interest or dividends for 2025.

Yes, you can move funds from a UTMA Custodial Account into a 529 plan, but it is considered a liquidation and reinvestment, not a direct rollover. You must sell the assets in the custodial account and deposit the cash into a new Custodial 529 Account for the same beneficiary, which may trigger capital gains taxes.

If the 1099-B is in the name of your child, then it would be income on your child's return. A child must file their own tax return (Form 1040) if they have over $2,700 in unearned income (e.g., 1099-B stock sales, interest, dividends) for 2025. While parents can report interest/dividends on their own return using Form 8814, 1099-B transactions usually require the child to file a separate return, potentially using Form 8615 for taxes on unearned income. 

• What is Form 8615: Tax For Certain Children Who Have Unearned Income
• What is the kiddie tax?

Note: While wages are not taxed under kiddie tax rules, they are included in the child’s total gross income, which determines if a tax return is required and if the child qualifies as a dependent.

[mpweis]

Thank you for the explanation. I have some clarifying questions if you don't mind. Also, to provide additional background, the child has no other income outside this 1099-B.

The 1099-B in question has both the custodian's and the child's name on it. Does this mean it could be filed on the custodian's tax return? Assuming this is not the case, then to clarify, are the box 1d Net proceeds considered the unearned income amount that is compared to the $2,700 unearned income limit for filing? Box 1d in summation of all transactions exceeds the limit in our situation. Given the box 1e Cost or other basis amount exceeds box 1d in aggregation, and is reported as a loss on the 1099-B (which is not reported to the IRS, it footnotes), can we expect there to be no income tax owed by the child sourced in this 1099-B?

Somewhat related, we owned this UTMA for a portion of 2025 before the liquidation and re-investment. We didn't receive a 1099-DIV on the UTMA like we did in 2024 and other years past. Should we have received one or are there conditions for which it is not required?

[PII removed]

[LindaS5247]

A 1099-B, which reports capital gains/losses from a custodial (UTMA/UGMA) account, generally must be filed on the child's own tax return, even if both names are listed, as the child is the legal owner. It cannot be reported on a parent’s return.

No, the amount in Box 1d on Form 1099-B is generally not the amount you  would compare to the $2,700 unearned income limit for filing or the "kiddie tax."  The unearned income amount used to determine filing requirements is the net taxable gain (or loss) from the sale, not the gross proceeds The unearned income for filing purposes is the Net Gain (Box 1d minus Box 1e). 

If that is the case than yes, you should expect there to be no income tax owed. However, the transaction must still be reported on the child’s tax return (Form 8949/Schedule D) to properly document the loss.

In general, You should have received a 1099-DIV (or 1099-B for the liquidation) if the account earned over $10 in Dividends or had other reportable sales. 

What's the Kiddie Tax?

Please return to Community if you have any additional information or questions and we would be happy to help.

[mpweis]

Hello,

I am not sure how to interpret your reply LindaS5247. Why must I file a tax return for my child if the child's noted 1099-B documents an unearned income loss, and there is no other reason to file a tax return for the child? I'm referring to paragraph 3 which indicates a tax return is required to document the loss, but then in paragraph 4 the statement that no tax return is required when the unearned income is less than $1350.

[PII removed]

[DianeW777]

Let's see if I can clear it up for you.  The IRS knows about the gross proceeds, and sometimes the cost basis. If your child meets the filing requirements with the net gain or (net loss), then a return must be filed.

If the net gain or (net loss) is below the filing requitement, then keep the document in your tax file and do nothing.

Dependent/Child Filing Requirement:

• Tax requirements for dependent children are different from those of other taxpayers.
• A dependent child who has earned more than $15,750 of earned income (tax year 2025) typically needs to file a personal income tax form. Earned income includes wages, tips, salaries, and payment from self-employment.
• A dependent child who receives more than $1,350 in investment income in 2025 is required to file a tax return. Investment income includes interest and dividend payments.
• If your child’s investment income consists only of interest and dividends, you can use IRS Form 8814 to include it on your own return and combine it with your own income. Doing this may push you into a higher tax bracket and result in higher income tax than if you prepare a separate return for your child.

The Kiddie Tax only applies to unearned income in excess of $2,700.

$0 - $1,350 isn't taxed.

$1,351 - $2,700 is taxed at the child’s tax rate.

Over $2,700 is taxed at the parents’ marginal tax rate.

@mpweis 

[Edited: 03/31/2026 | 8:03 AM PST]

[mpweis]

Forgive my persistence, but something does not add up for me.

I don't find a Gross Proceeds column on my daughter's 1099-B. The closest column name I have to that is Net Proceeds (column 1d). 

My daughter's 1099-B specifically identifies columns not shared with the IRS and box 1d and box 1e (Cost or other basis) are not one of these. The Gain/Loss column is not shared with the IRS, it is negative for both transactions (one short-term, one long-term) and equals the difference 1d - 1e. Is the Gain/Loss the capital gains amount for each transaction? 

I plan on filing a return for my daughter to see where this leads. 

Thank you for your time.

@LindaS5247

[DianeW777]

Please note my change in the previous post and based on the information from your daughter's 1099-B, it appears she is not required to file since she has an overall loss and there is no other income.

There is no need to file a return for your daughter in this situation. Keep your document in your tax file should you need it later.

@mpweis