What are the Uniform Transfer to Minors and Gift to Minors accounts?
Answer:
Uniform Transfer to Minors and Gift to Minors accounts are custodial accounts set up in a child’s name. There are no income eligibility limits to set up an account. Contributions are not tax deductible.
You may put up to $13,000 a year without any gift tax consequences.
As the custodian you have the choice to invest the money in any investment you choose. The current year tax consequences are that the first $950 of the investment earnings is tax free; the next $950 will be taxed at the child’s tax rate.
Any earnings above $1,900 will be taxed at the parent’s rate until the child is 18 years of age. After 18 the earnings are taxed at the child’s rate. An important item to note with these custodial accounts is that the account belongs to the child.
The child gains full control of the Uniform Gift account at age 18 and gains control of the Uniform Transfer account at age 21. Speak to your local CPA for more information on these custodial accounts.
You may put up to $13,000 a year without any gift tax consequences.
As the custodian you have the choice to invest the money in any investment you choose. The current year tax consequences are that the first $950 of the investment earnings is tax free; the next $950 will be taxed at the child’s tax rate.
Any earnings above $1,900 will be taxed at the parent’s rate until the child is 18 years of age. After 18 the earnings are taxed at the child’s rate. An important item to note with these custodial accounts is that the account belongs to the child.
The child gains full control of the Uniform Gift account at age 18 and gains control of the Uniform Transfer account at age 21. Speak to your local CPA for more information on these custodial accounts.
