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New Member
posted Jun 3, 2019 1:09:22 PM

I have a custodial account disbursement that I used to pay for college. Is that taxable?

I received a 1099-B from the bank for this account

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1 Best answer
Level 15
Jun 3, 2019 1:09:23 PM

Yes. A custodial account does not get the same tax breaks as a formal  college savings("529") plan. 

But the 1099-B amount is not the taxable amount. That is what the stock or mutual fund was sold for. The taxable amount is the capital gain on the sale. Long term (> 1 year) capital gains are taxed at lower rates than ordinary income.

1 Replies
Level 15
Jun 3, 2019 1:09:23 PM

Yes. A custodial account does not get the same tax breaks as a formal  college savings("529") plan. 

But the 1099-B amount is not the taxable amount. That is what the stock or mutual fund was sold for. The taxable amount is the capital gain on the sale. Long term (> 1 year) capital gains are taxed at lower rates than ordinary income.