When a child is legally old enough to take control of his UGMA money...?

Question

1) Will he have to pay any taxes on that money? (I think the answer is no, but just making sure.)

2) Will that money count against his AGI thereby making it more difficult to open, say, a Roth IRA? (Again, I think the answer is no.)

Thanks in advance.

Answer 1

1. When the child reaches the age of majority, normally 18.

2. The INCOME from the account is taxable to the minor from day one. The principal amounts are not as they are a gift.

Unless the child has earned income, the money cannot be used to fund an IRA, either traditional or Roth. IRA contributions are limited to the lesser of $4,000 per year or the earned income for the year.

Answer 2

Take over account - 18.

Pay taxes on the unearned money - one day old There is no min. age to pay taxes.