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  • Savings accounts and taxes...

    Ok, I'm going to talk this over with the Mrs, but I want to know the tax implications.

    I want to start putting some of my paycheck into a savings account my son has. He's almost 13, so he's still a minor, but I'm wondering what the tax implications are there. The money would be "post tax". In other words, I get taxed on my full pay, and then they would take the money and put it into the appropriate accounts.

    It wouldn't be a huge amount of money. I usually get paid on a bi-weekly basis, so that's when I'd put money in.

    For the savings for my wife and I, I'm not too worried. I'm just curious about the tax implications for my son's savings. I wouldn't think he would have to pay, but I don't know, so I'm asking. We give him $$$ anyway from time to time for chores and such, but I want to start putting money in his account regularly.
    Skilled programmers aren't cheap. Cheap programmers aren't skilled.

  • #2
    I dropped Karl a PM.
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    • #3
      Quoth EricKei View Post
      I dropped Karl a PM.
      Gracias. I shoulda thought of that...
      Skilled programmers aren't cheap. Cheap programmers aren't skilled.

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      • #4
        If and when the interest exceeds $1050, your child will be legally required to file a return. His standard deduction will be as calculated on page 39.
        If the gift is totals less than $15000 for the year, no additional forms on your part are required. Otherwise a gift (or generation skipping) return is required-Form 702, FWIW.
        In most states, if you contribute to an in-state higher education plan (529), you may have some savings on your state taxes. The amounts vary state-to-state, needless to say.
        I'm trying to see things from your point of view, but I can't get my head that far up my keister!

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        -Ayn Rand, Atlas Shrugged

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        • #5
          Quoth taxguykarl View Post
          If and when the interest exceeds $1050, your child will be legally required to file a return. His standard deduction will be as calculated on page 39.
          If the gift is totals less than $15000 for the year, no additional forms on your part are required. Otherwise a gift (or generation skipping) return is required-Form 702, FWIW.
          In most states, if you contribute to an in-state higher education plan (529), you may have some savings on your state taxes. The amounts vary state-to-state, needless to say.
          Hmmm...ok. I know the word "interest" can have different meanings. Do you mean interest as in "I'm getting 5% interest"?

          Or is it "interest" as in "a share, right, or title in the ownership of property, in a commercial or financial undertaking, or the like"?

          Because it's possible that within a couple of years he could have close to $2,000 in there. It's a savings account, and not an education plan.

          I just don't want to get anyone into any trouble.
          Skilled programmers aren't cheap. Cheap programmers aren't skilled.

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          • #6
            Check out a Roth-IRA for him. Since it's post tax the interest isn't taxable.
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            • #7
              Yeah, on a $2000 account you aren't going to get > $1050 of interest unless you've been picked to be the rigged demo account for a Ponzi scheme.
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              • #8
                Quoth mjr View Post
                Hmmm...ok. I know the word "interest" can have different meanings. Do you mean interest as in "I'm getting 5% interest"
                This type.
                I'm trying to see things from your point of view, but I can't get my head that far up my keister!

                Who is John Galt?
                -Ayn Rand, Atlas Shrugged

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