1099-DIV received from Custodian account ( UMTA)

[manish2003]

Hi,

Do we have to report UMTA account on income taxes? If we received 1099-DIV from UMTA account, do we have to report if dividend amount is less than $1000?

Thanks.

[Bsch4477]

The custodian is responsible for managing the account and dealing with associated tax matters until the minor reaches the age of majority. However, the income must be reported under the child's social security number as the child legally owns the account

At a level of $1,000 the child would have no tax liability or filing requirement. 

[rjs]

If the minor's total unearned income (such as investment income), including the dividends, is more than $1,150 (for 2022) the minor is required to file a tax return. If the minor is too young to file by himself or herself, the minor's parent is responsible for filing the minor's tax return. The custodian of the UTMA account is not necessarily the minor's parent. Filing the tax return is the responsibility of the parent, not the custodian.

[Hal_Al]

Q. Do we have to report UMTA account on income taxes? If we received 1099-DIV from UMTA account, do we have to report if dividend amount is less than $1000?

A. No. 

You do not report your child's income on your return*. If it has to be reported, at all, it goes on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2022 if he had any of the following:

1.          Total income (wages, salaries, taxable scholarship etc.) of more than $12,950 (2022).
2.          Unearned income (interest, dividends, capital gains, unemployment, taxable portion of 529 distribution) of more than $1150 (2022)
3.          Unearned income over $400 (2022) and gross income of more than $1150 (2022)
4.          Household employee income (e.g. baby sitting, lawn mowing) over $2300 ($12,950 if under age 18)
5.          Other self employment income over $432, including money on a form 1099-NEC

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.

*If his only income is from interest and dividends, Alaska PFD or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on your return, using form 8814. Enter at Less common income / Child's income. But, it is usually best for him to file a separate return, as qualified dividends and capital gain distributions could be taxed at a higher rate on the parent's return.