In looking at the previous posts regarding the Uniform Gift to minors and IRS publications I’m am totally confused about this. I wanted to see if anyone could tell me if I’m interpreting this correctly, the funds used from my sons account (under his social security number) used to pay for tuition are NOT deductible as tuition expense? The IRS publication stated if he paid for tuition himself and he could be claimed on someone else’s taxes as a dependent then the tuition paid by him was not deductible? He usually doesn’t make enough to have to file taxes at all so any earnings or tax reporting have been on my return so i’m a little confused at this point.
No. Any annual earnings from UGMA accounts are reportable on your child’s tax return. However, the funds used to pay for you child’s tuition may qualify you (or your child - rare) for education credits
Thank you. I’ve been reporting his earnings on my taxes since he didn’t make enough to file in the past but he also turned 21 in September so that may add another twist to tax time.
OP, do you aware that regular UGMA accounts hurt more on financial aid (FAFSA - 20%) than your regular accounts? See http://www.finaid.org/savings/ugma.phtml
it’s way too late for that i’m afraid, opened the account when he was like 2 but yes i’m seeing that now. Don’t think 529 even existed back then but yes if you wanted access to funds strictly for college then 529 would have been the way to go. UGMA though allows flexible access to funds for other things, as someone mentioned in another thread, orthodontics, or down payment on his first home or whatever, seemed like a good idea at the time. LOL