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I have an adult child and a soon to be adult child that both…

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I have an adult...

I have an adult child and a soon to be adult child that both have UTMA accounts from family. they nor I have never paid taxes on these. are they taxable account or only if the money is taken out?

Submitted: 1 month ago.Category: Tax
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1/9/2018
Tax Professional: Mark D, Enrolled Agent replied 1 month ago
Mark D
Mark D, Enrolled Agent
Category: Tax
Satisfied Customers: 1,342
Experience: MBA, EA, Specializing in Business and Individual Tax Returns and Issues
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Hello. An UTMA account's earnings are taxable to your child each year. However, the first $1050 of earnings each year are tax free and require no filing. Amounts above that will be taxed at a mix of the child's rate and then the parent's rate. If you had stock sales, you may need to file even if the gross profit was less than $1050. Does this answer your question? Please rate my service if so.

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Customer reply replied 1 month ago
I have an annual statement that says the UTMA account made $7600 this year. That 7600 is taxable?
Tax Professional: Mark D, Enrolled Agent replied 1 month ago

Most of it will be, yes. Your child that owns the UTMA will file a tax return reporting the earnings. Kiddie Tax will apply still for 2017, which in short means your child will pay taxes at your rate on some of the income. I generally recommend hiring a tax professional to prepare a return that involves kiddie tax

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Mark D, Enrolled Agent
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