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iBonds and UTMA screw-up. Help?

- Over the years, I purchased some iBonds in a custodial account on TreasuryDirect in my minor child's name
- I recently sold $40k of those bonds
- The proceeds of those sales were wired into *my* personal checking account
- I immediately transferred those proceeds into a checking account that I had recently opened in the child's name. Same day, same transaction amounts.

Now I realize I probably screwed up here; I should have figured out how to get TD to transfer the proceeds into my child's account directly.


Come tax time, is there any way I'm going to be able to sort this out so the IRS understands what I was trying to achieve here: a pass-through of my child's assets rather than an UTMA gift?

Thanks so much in advance.

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2 Replies

iBonds and UTMA screw-up. Help?

if TD issues the reporting forms using the child's SSN, then there's nothing for you to do. However, the Kiddie Tax rules may apply depending on his age 

https://www.investopedia.com/terms/k/kiddietax.asp 

if it's your SSN, contact them to find out what to do so the income is not reported to the iRS under your SSN. The KT rules would still apply

iBonds and UTMA screw-up. Help?

Thanks very much for the quick reply!  And apologies for not being clear:

I think I'm good in terms of reporting the iBond income on my child's SSN.


My worry is that my bank (Wells Fargo) is going to report to the IRS on the transfer of the proceeds from my checking account to my child's as a gift under UTMA, and that I'm going to have to contend with that.

But I'm not actually sure that reporting even happens.

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