What are the rules for UTMAs and how are they taxed?

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In this video we breakdown how UTMAs/UGMAs are funded, how they grow, and then ultimately how money is distributed. We will talk about in which situations the kiddo will need to file their own return vs when the parents can just file these proceeds on their behalf.

00:00 - Intro
00:54 - UTMA Overview
02:48 - Funding and Compounding
03:39 - Gifting Overview
05:31 - How to treat gains/income from UTMA
09:19 - Using Losses in UTMA
10:29 - Calls to Action

#financialplanning #wealthmanagement #financialservices #taxes #retirement #retirementplanning #stocks #edmonds #seattle #cfp #tax #kiddie #investing #education

[omenind]

Fantastic video. Thank you for covering what other videos have skipped.

[elucia]

i dont know how/why this video has such low views. this was a better/more informed video i've come across explaining the taxes. thank u!

[carbon-structure]

Thanks for this video, very useful. But dear lord I despise the IRS.

[maxshiraz]

So the only upside is that if the earnings were $2500, you could save a few hundred dollars each year on taxes. Seems like a small benefit on a balance of $25k or $30k that would be needed to generate that income. A 529 plan has generallly a state tax deduction on contributions and no tax payable on growth, so that seems like a much better option - obviously for education.

[raylewis]

Thanks I was wanting to know if our 18 yo granddaughter should file taxes on her own, now I know since the withdrawal was over 13k

[palerider]

We have a couple of adult children with two accounts in their names. My wife hasn't gotten them transferred so they show up on our taxes and we pay the tax. It's not a lot but I hope it does show the tax on their accounts is being paid there is a form that downloads to TT. We need to get them out of our account.

[SeattlePioneer]

What would be the simplest tax form to use to report UGMA income in the child's name?

If small amounts of UBMA income are all that a child has to report, that seems easy enough to do, and should be an education for the child in hating the IRS.

I seem to recall Sheldon Cooper on "Young Sheldon" fencing with an IRS agent over his father's taxes.

[TechNico]

Great video Chris! So if my son's UTMA is less then $1250 I do not need to file for him this year?

[Eltoyo]

My kid UTMA account only generates about $125 in dividends a year, do I have to report that to the IRS? Do I have to claim it in my tax return?

[extremeflext]

If the money inside the kids account is left alone in the stock market, and not sold, and the money continues to grow with unrealized gains, I am assuming as long as you dont sell those stocks in a tax year, they're not taxed, correct? There might be dividends paid in that year, which would be So if my stock grows 1000 a year in unrealized gains, would it be smart to sell those stocks and then rebuy in the same year to take advantage of the no taxes paid if under 1250 a year? That way if stocks are up the following year, that growth wouldn't be on top of the 1000 from the previous year?

[lisetteestrada]

My kid who is 10 yo wants to start investment . So i want to encourage her to learn more. She has 700 usd to starts.if i understand correctly. We will have to disclose the gains . If the gains are above 1, 250? Will you recomend a utma vs opening an account under my name

[gregoryellis]

Report on Parent's return even if the grandparent is the custodian?

BTW, "Eery year" LOL!

[lrysnkw]

Is it just me or could IRS have named the kiddie tax a less inappropriate name. Idk, like a kiddo tax. 😂