Why Do Most Married People File Their Taxes Jointly?
If your child’s custodial account generates $4,000 in income during the tax year, $950 is tax-free, $950 is taxed at her rate – which might be as low as 10 percent – and $2,050 is taxed at your rate.
Who is responsible for paying taxes on a custodial account?
1 Ownership. When you establish and fund a custodial account for your child – either an UGMA or UTMA account – it’s a gift you can’t take back. 2 Taxation. Because your child technically owns the account, she’s the one who pays taxes on its growth – but this isn’t quite as cut-and-dried as it sounds. 3 The Kiddie Tax. 4 Parents’ Option. …
