Savings accounts and taxes...

[taxguykarl]

Hmmm...ok. I know the word "interest" can have different meanings. Do you mean interest as in "I'm getting 5% interest"

This type.

[dalesys]

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.

[Tanasi]

Check out a Roth-IRA for him. Since it's post tax the interest isn't taxable.

[mjr]

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.

[taxguykarl]

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.

[mjr]

I dropped Karl a PM.

Gracias. I shoulda thought of that...

[EricKei]

I dropped Karl a PM.

[mjr]

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.