My baby right now is 4 months old. I already have a separate educational savings account for his college, but wonder what's the best way to save for him, if I want to have separate funds as well. I also wonder, if a savings account or a CD is opened for him under his own name and social, do I have to file taxes for him? Thanks!
2007-01-30 19:37:49 · 6 answers · asked by alinkau 1 in Business & Finance ➔ Personal Finance
Depending on the amount of money and how safe you want it to be, there are money market accounts, CD's, savings bonds, or to get a little riskier, but the possibility of a higher return, stocks and mutual funds.
Tax laws allow you to include your child(ren)'s taxable income on your own return up to a certain amount, so you do not have to file a separate return for small amounts of income.
2007-01-30 19:46:25 · answer #1 · answered by Brian G 6 · 0⤊ 1⤋
An education savings account along with UTMA accounts, ee bonds and such result in ordinary income for your child.
If the money is for education then I would suggest that you look at a 529 College Savings plan. You may get a subtraction on your state tax returns the money grows totally tax free and nothing is taxable if the funds are withdrawn to pay for post secondary education. The fees for such an account are low and you can invest in different funds so that you can increase the yield on the investments over time. The plan usually has access to a balanced mutual fund that invests in stocks and bonds. If you are leaving funds in the account for many years this is not a bad option over the long term.
I would stay away from broker's and insurance products. Variable annuities sound good until you realize no one manages your money and the agent gets anywhere from 10% to 15% of the money you invest. Don't ever mix investments and insurance products it is bad for both the insurance and the investment.
2007-01-30 22:45:58 · answer #2 · answered by waggy_33 6 · 0⤊ 1⤋
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2016-10-16 08:44:53 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Savings bonds, CDs, UGMA/UTMA accounts. I hope by "educational savings account," you mean a 529 plan. If not, you need to check it out.
Also, look into Variable Universal Life. There are purists out there who will tell you that this is an awful idea, but decades of tax deferral and tax-free withdrawals, along with the likelihood that your child will never have to qualify for life insurance in the future can make it an extremely nice option.
2007-01-30 19:48:08 · answer #4 · answered by Rob D 5 · 0⤊ 1⤋
Well I can't tell you anything as far as the tax issue. But I can tell you a neat way to save for your baby. Its simple but it works wonderful for me and my husband. We bought a piggy bank for our son(before he was born) and we put all of the loose change we got in it, and opened a regular savings account. and everytime we emptied the bank we deposited that money into it, and in the 9 months i was pregnant we saved over $300 for him. And we diddint worry about getting anything in his name (although we talked about it) b/c it was simpler to put it in ours, and neither of us would ever touch the money that belonged to our child anyway, as im sure you wouldant
2007-02-01 18:01:12 · answer #5 · answered by durango_girl2747 2 · 0⤊ 0⤋
EEE Savings bonds.
2007-01-30 20:41:59 · answer #6 · answered by Anonymous · 0⤊ 0⤋