Quick question, not sure if it crosses the line into legal advice, but I’ll ask anyways. I’m doing my taxes right now and one of the things Turbo Tax says is that you must report any interest income over $850 for a minor. My savings account brought in about $150 last year. Should I have them in my 12mo old daughters name? Or will they then wonder where she got the cash to bring in that much interest?
Your question is confusing. Are you suggesting that you should use your daughter’s identity to open an account for your own personal use? That’s extremely illegal.
If you want to start a (legitimate) savings account for your daughter, ask your bank about opening a UGMA account.
I guess that’s the answer I was looking for then.
One of the savings accounts is specifically earmarked for her education though.
The one for her education, is it in your name and are the custodian of her account, or did you simply open up an account in your name for her?
If the latter, the interest and dividends will get taxed via 1099-INT and/or 1099-DIV in your name and must be reported (how would the IRS know it is for her?). To avoid her getting taxed on interest earned that is hers under $850, go with a UGMA account or similar “Kids Only Savings” type account. Ask your bank about this. And if it is solely for education, 529 type accounts grow tax free for educational purposes, but is a different animal then savings accounts…