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    Mutual Funds and Tax Question

    Many years ago I started a tech mutual fund for my minor daughter. I am the custodian on the account, but her SS is tied to the account. She is now 18 and has taken the money out.

    A couple questions about taxes.

    - I assume the initial investment and the monthly contributions I made aren't taxed as it's after tax money. So are you only taxed on how much money was made over the time period?

    - She has no other job, so under normal circumstances she wouldn't even file income taxes. Does this fund require her to?

    - If she does need to file, what rate is the money earned taxed at? A certain rate or is it based on her income?

    Thanks...

    #2
    If her fund was sold at a profit, yes she needs to file. However, if she had no other income, her personal exemptions should void the gain for tax purposes, unless the gain exceeds $10,000.

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      #3
      Originally posted by salsa View Post
      Many years ago I started a tech mutual fund for my minor daughter. I am the custodian on the account, but her SS is tied to the account. She is now 18 and has taken the money out.

      A couple questions about taxes.

      - I assume the initial investment and the monthly contributions I made aren't taxed as it's after tax money. So are you only taxed on how much money was made over the time period?

      - She has no other job, so under normal circumstances she wouldn't even file income taxes. Does this fund require her to?

      - If she does need to file, what rate is the money earned taxed at? A certain rate or is it based on her income?

      Thanks...
      nope, once she cashes out it get added to her income. depending on whether it pays dividends or interest, some muni's pay both, some pay one or the other. one may be taxable the other not.

      it was a lousy deal talking us parents into saving that way, we hit right and left for the tax gains.

      if the company holding the funds sends her a 1099DIV you must file unless it's under the min required.

      also see about off setting the gains.
      8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

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