Re: Tax Implications for Custodial Account for Infant (Investment Firm)

"frank1492" <frank1492@xxxxxxxxxxx> wrote:

I am considering a custodial account for an infant. It will be set up
at Smith Barney. I am told I will receive a 1099 annually.

No, the infant will, assuming this is a standard UTMA account established
for the infant's benefit under the infant's SSN.

I assume I will have to file a tax return as custodian for the
baby. I'm interested in how complicated this will be as I am
already doing my own taxes which are fairly complex.
Could anyone give me an idea of the info that would be
involved in filing such a return? I am guessing it would be
fairly simple, but I want to check before I get involved.

It's much better for the parents to attend to this since it involves looking
at their income also. See the discussion in Chapter 31 of IRS Publication
17.

If the purpose of this is to establish a higher education fund, you might be
better served by a Qualified Tuition ("529") plan as described in IRS
Publication 970.

--
Phil Marti
Clarksburg, MD


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