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Until 1986, a UGMA or UTMA account allowed the assets to be taxed at the minor's income tax bracket. Tax law changes in 1986, 2006, 2007 and 2017 known as the "kiddie tax" have substantially reduced the tax savings of UGMAs and UTMAs.
The Uniform Transfers To Minors Act (UTMA) is a uniform act drafted and recommended by the National Conference of Commissioners on Uniform State Laws in 1986, and subsequently enacted by all U.S. States, which provides a mechanism under which gifts can be made to a minor without requiring the presence of an appointed guardian for the minor, and which satisfies the Internal Revenue Service ...
The kiddie tax doesn’t mean that if your child’s assets are valued at more than $2,500, you’ll need to pay taxes. Instead, it applies if the dividends, interest and capital gains exceed ...
Uniform Transfers to Minors Act (UTMA) accounts: UTMA accounts are more flexible than UGMA accounts, in that they can hold any type of property, whether it’s tangible or intangible, including ...
Here’s how custodial accounts work.
A custodial account is a financial account (such as a bank account, a trust fund or a brokerage account) set up for the benefit of a beneficiary, and administered by a responsible person, known as a legal guardian or custodian, who has a fiduciary obligation to the beneficiary. [1]
Continue reading ->The post How a UTMA Compares to a 529 Plan appeared first on SmartAsset Blog. The cost of higher education has skyrocketed over the last few decades, and shows no signs of ...
A Coverdell education savings account (also known as an education savings account, a Coverdell ESA, a Coverdell account, or just an ESA, and formerly known as an education individual retirement account), is a tax advantaged investment account in the U.S. designed to encourage savings to cover future education expenses (elementary, secondary, or college), such as tuition, books, and uniforms ...