Discussion:Kiddie tax on UTMA accounts to custodian or parent?
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Discussion Forum Index --> Advanced Tax Questions --> Kiddie tax on UTMA accounts to custodian or parent?
Discussion Forum Index --> Tax Questions --> Kiddie tax on UTMA accounts to custodian or parent?
| 18 September 2008 | |
| My question is if you have a UTMA account that the grandparent set up for the grandchild and the earnings are over those allowed under the kiddie tax, is the parent or the custodian taxed on the additional earnings? The pub 17 says it should be the parent, but the grandparent is the custodian. Thanks SusieQ | |
| 18 September 2008 | |
| not unless the parent so elects
otherwise the child is taxed, he is the owner | |
| 18 September 2008 | |
| just curious how you get 'additional' earnings in today's market | |
| 18 September 2008 | |
| Yes....I was not clear...the child is taxed yes but at whose tax rate? The parent or the custodian? | |
| 18 September 2008 | |
| Well yes....the instructions say the parent. I guess then.....this allows an income shifting opportunity for grand parents with high income to parents with low income I would think, there would be a stipulation, that the tax would be at the custodian rate. Interesting...... I guess I was wondering if anyone knew of a code line that might allow me to tax it to the custodian (grandparent) since I think that was the intention of 8615...to tax it to the party who actually provided the money.
And to answer your question, the product is a fixed income investment....hence the income. Thanks | |
Death&Taxes (talk|edits) said: | 18 September 2008 |
| Oh what a ball of wax you would open. Think about what you wrote.....if grandparents A gave 40% of a custodial account and grandparents B gave 25% and parents gave 30% and Uncle Pete put in the rest???????? Interest tracing on the deduction side would be a walk in the park compared to this. | |
| 12 October 2008 | |
| If the intent was to have the interest income taxed to the grandmother, then she should have set up a revocable trust for the benefit of the child. | |
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