Anonymous
10/22/2023 03:19
Subject: Custodial Account Question
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Gift tax?
The transfer appears to be illegal, but if the $$ was in the child’s name and the transfer were appropriate for some reason, if it was over $17,000 (or $34,000 if to both parents), I assume it would trigger a need to file a disclosure with the IRS and the amount would be credited against the child’s total estate exemption amount.
How do the parents gift themselves money that isn’t theirs? It belongs to their daughter.
Well, yes. That’s the “illegal” part. However, even if they want to claim the kid consented to the transfer somehow, the reporting requirements would kick in.
Also, banks report cash deposits of over $10k to the IRS, so the IRS may come knocking, wondering where that $$ came from.
Anonymous
10/22/2023 03:17
Subject: Custodial Account Question
Anonymous wrote:Anonymous wrote:Anonymous wrote:Gift tax?
The transfer appears to be illegal, but if the $$ was in the child’s name and the transfer were appropriate for some reason, if it was over $17,000 (or $34,000 if to both parents), I assume it would trigger a need to file a disclosure with the IRS and the amount would be credited against the child’s total estate exemption amount.
How do the parents gift themselves money that isn’t theirs? It belongs to their daughter.
Well, yes. That’s the “illegal” part. However, even if they want to claim the kid consented to the transfer somehow, the reporting requirements would kick in.
Anonymous
10/21/2023 05:16
Subject: Re:Custodial Account Question
^^ and that only works if the child is in a state where the transfer happens at 21. If it’s 18 where she lives, the money needed to already be turned over to the child.
Anonymous
10/21/2023 05:13
Subject: Re:Custodial Account Question
Anonymous wrote:I think it can be done if parent indicates to financial firm that funds are for the benefit of the child.
No, it can’t. She’s not using the money for the child. She’s transferred the money out of the child’s name into her own name. The child could never get it when the child wants now, as it’s wholly subject to if, as, and when the mom chooses to regift it to the kid.
Instead, she could have said to the financial institution: kid is in need of extensive tutoring. I am withdrawing $2000 to pay for that. Then she does withdraw $2000 and does pay a tutor $2000. That’s allowed.
Anonymous
10/20/2023 20:29
Subject: Re:Custodial Account Question
I think it can be done if parent indicates to financial firm that funds are for the benefit of the child.