Taxes on UGMA

Paying for College
1

<p>Does anyone know anything about if and when and who pays taxes on UGMA account?
Thanks!</p>

2

<p>UGMAs are accounts owned by minors. If there are any taxable events (dividends, interest, realized capital gains) in the account, you’ll receive a 1099 from the brokerage. If unearned income is less than $950 for the minor, then you’re not required to file taxes. The second $950 is taxed at the child’s rate of 5% or 10% (depending on earned income if any). After $1900, taxes are paid at the parent’s marginal rate. Taxes can be paid by taking cash out of the UGMA, or else the parent can pay the tax. </p>

<p>[The</a> Kiddie Tax - TurboTax® Software Support](<a href=“http://turbotax.intuit.com/support/iq/Additional-Tax-Payments/The-Kiddie-Tax/GEN12391.html]The”>http://turbotax.intuit.com/support/iq/Additional-Tax-Payments/The-Kiddie-Tax/GEN12391.html)</p>

3

<p>Thanks for this information. </p>

<p>We’ve never got a 1099 form for this account. Now that I’m about to withdraw the money to use for college, I was wondering if there would be some taxes.</p>

4

<p>Can you look at your account online? My broker has a page for tax information which shows year-to-date dividends, capital gains and interest. If you’re going to sell stock or mutual funds, you won’t see any capital gains/losses until the sale occurs.</p>

5

<p>How long have you had this account?</p>

<p>We receive Forms 1099 for both of our kiddie accounts…they usually pay some kind of dividends or CGs each year. There was only one year when my son owed taxes on earnings, and it was a pain to have to file the 1040 long form for that.</p>

<p>We’re cashing out the S’s account this year to pay for first year college expenses, and with the cost basis he will actually be losing money, but some of that cost basis is reinvested income from previous years.</p>