Where to park cash gifts for kids?

[chassis]

Regarding the kiddie tax, the way I read the IRS website is that the example given is for a singular child. To me this means the tests apply to each child individually. If each child, individually, meets all of the criteria listed, each of your children's income can be reported on your return. Read carefully and consult a tax professional if questions remain. I am not a tax professional.


From IRS.gov:


Parents' Election to Report Child's Interest and Dividends
You may be able to elect to report your child's interest, ordinary dividends, and capital gains distributions on your return. If you make this election, your child won't have to file a tax return. To make this election, attach Form 8814 PDF to your Form 1040 PDF, Form 1040-SR PDF or Form 1040-NR PDF if your child meets all of the following conditions.

At the end of the tax year your child was under age 19 (or under age 24 if a full-time student).
Your child's gross income was less than $11,000 for the tax year.
Your child had income only from interest and dividends (including capital gain distributions and Alaska Permanent Fund dividends).
No estimated tax payments were made for your child for the tax year, and no overpayment from the previous tax year (or from any amended return) was applied to the current tax year under your child's name and social security number.
No federal income tax was withheld from your child's income under the backup withholding rules.
Your child is required to file a return unless you make this election.
Your child doesn't file a joint return for the tax year.
You're the parent qualified to make the election or you file a joint return with your child's other parent.

https://www.irs.gov/taxtopics/tc553

 

[SecondCor521]

Anyone foresee any issue if we deposit the checks into their savings accounts and then transfer the funds to the UGMA Vanguard accounts?

Nope. That's how I'd do it. (Side tangent: The BofA savings accounts are probably custodian accounts under the hood. AFAIK minors can't have bank accounts of their own of any form, because bank accounts involve contracts, and contracts require informed consent, and kids under 18 are by law considered incapable of informed consent.)

You could mail the checks to Vanguard with a deposit slip or form, but that'll take longer. And it'll be nice to have the BofA and Vanguard accounts linked as your kids get older.

I don't think Vanguard does mobile deposit anyway.

Also, does anyone know if the kiddie tax exemption is $2.2k per kid or is that $2.2k total for all my dependents.

It's per kid.

Parents' Election to Report Child's Interest and Dividends
https://www.irs.gov/taxtopics/tc553

This is talking about choosing to report the child's income on the parent's return, which is a separate (but loosely related) topic. (At the top of tax topic 553, you can see that there are two items listed; you're quote mostly relates to the second item, but we've mostly been talking about the first item in this thread.)

A child of any age can file their own tax return. Most of the time until the kid is around college age they'll need to mark the box that someone else can claim them as a dependent, which affects a number of things on the tax return, most notably the standard deduction to which the child is entitled, but also the kiddie tax.

 

[audreyh1]

Sort of.

The individual states decide their age of majority that applies to UTMA accounts, and if you establish a UTMA account in that state, it is that state's age of majority that controls. In my state I'm pretty sure it's 21.

One cannot, for example, say "Oh hey, I'm opening a UTMA in <insert state> and I want the age of majority to be 24."

Well, 21 is quite different from 18.

 

[anothercog]

Nope. That's how I'd do it. (Side tangent: The BofA savings accounts are probably custodian accounts under the hood. AFAIK minors can't have bank accounts of their own of any form, because bank accounts involve contracts, and contracts require informed consent, and kids under 18 are by law considered incapable of informed consent.)

You could mail the checks to Vanguard with a deposit slip or form, but that'll take longer. And it'll be nice to have the BofA and Vanguard accounts linked as your kids get older.

I don't think Vanguard does mobile deposit anyway.



It's per kid.



This is talking about choosing to report the child's income on the parent's return, which is a separate (but loosely related) topic. (At the top of tax topic 553, you can see that there are two items listed; you're quote mostly relates to the second item, but we've mostly been talking about the first item in this thread.)

A child of any age can file their own tax return. Most of the time until the kid is around college age they'll need to mark the box that someone else can claim them as a dependent, which affects a number of things on the tax return, most notably the standard deduction to which the child is entitled, but also the kiddie tax.

This is helpful. Thanks.