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jdplante
New Member

Have two custodial accounts for my daughters. Claiming them as dependents. Accounts have dividends. No other income. Am I responsible for the taxes?

Have two custodial accounts for my daughters. Claiming them as dependents. Accounts have dividends. No other income. Am I responsible for the taxes?   Oldest daughter is attending college.  Youngest daughter at home.


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DDollar
Expert Alumni

Have two custodial accounts for my daughters. Claiming them as dependents. Accounts have dividends. No other income. Am I responsible for the taxes?

It's not a simple answer.  The accounts and the dividends belong to your daughters.  They are responsible for fling (if required) and paying the tax (if any is owed).  If a dependent child must file an income tax return but can't file due to age or any other reason, a parent, guardian, or other legally responsible person must file it for the child.

Your daughters are required to file a tax return if:

  • Their unearned income was more than $1,050
  • Their earned income was more than $12,000
  • Their gross income was more than the larger of—
    • $1,050, or
    • Their earned income (up to $11,650) plus $350

Election to report child's unearned income on parent's return.

You may be able to include your child's interest and dividend income on your tax return. If you do this, your child won't have to file a return. To make this election, all of the following conditions must be met.

  • Your child was under age 19 (or under age 24 if a student) at the end of 2018. (A child born on January 1, 2000, is considered to be age 19 at the end of 2018; you can't make the election for this child unless the child was a student. Similarly, a child born on January 1, 1995, is considered to be age 24 at the end of 2018; you can't make the election for this child.)

  • Your child had gross income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).

  • The interest and dividend income was less than $10,500.

  • Your child is required to file a return for 2018 unless you make this election.

  • Your child doesn't file a joint return for 2018.

  • No estimated tax payment was made for 2018 and no 2017 overpayment was applied to 2018 under your child's name and social security number.

  • No federal income tax was withheld from your child's income under the backup withholding rules.

  • You are the parent whose return must be used when making the election to report your child's unearned income.

For more information see: IRS Publication 501 



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1 Reply
DDollar
Expert Alumni

Have two custodial accounts for my daughters. Claiming them as dependents. Accounts have dividends. No other income. Am I responsible for the taxes?

It's not a simple answer.  The accounts and the dividends belong to your daughters.  They are responsible for fling (if required) and paying the tax (if any is owed).  If a dependent child must file an income tax return but can't file due to age or any other reason, a parent, guardian, or other legally responsible person must file it for the child.

Your daughters are required to file a tax return if:

  • Their unearned income was more than $1,050
  • Their earned income was more than $12,000
  • Their gross income was more than the larger of—
    • $1,050, or
    • Their earned income (up to $11,650) plus $350

Election to report child's unearned income on parent's return.

You may be able to include your child's interest and dividend income on your tax return. If you do this, your child won't have to file a return. To make this election, all of the following conditions must be met.

  • Your child was under age 19 (or under age 24 if a student) at the end of 2018. (A child born on January 1, 2000, is considered to be age 19 at the end of 2018; you can't make the election for this child unless the child was a student. Similarly, a child born on January 1, 1995, is considered to be age 24 at the end of 2018; you can't make the election for this child.)

  • Your child had gross income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).

  • The interest and dividend income was less than $10,500.

  • Your child is required to file a return for 2018 unless you make this election.

  • Your child doesn't file a joint return for 2018.

  • No estimated tax payment was made for 2018 and no 2017 overpayment was applied to 2018 under your child's name and social security number.

  • No federal income tax was withheld from your child's income under the backup withholding rules.

  • You are the parent whose return must be used when making the election to report your child's unearned income.

For more information see: IRS Publication 501 



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