If you have children, you may be the custodian on a savings or investment accounts in the name of your children. These accounts might generate interest or dividends. At the end of the year, how do you report the income and pay taxes on these accounts?
Technically, any income resulting from these accounts belongs to your dependents, even though you are the custodian on the account. Your dependents may or may not have to file a tax return to report this income. If a dependent under the age of 65 earns more than $1,050 in unearned income (things like interest and dividends), then they have to file a tax return.
Optionally, the parent of a child under 19 (24 if full-time student) can report this income on their return. When in doubt, just provide the income information to your tax preparer and they can help to determine if a return is needed or if you can report it on your own return.
Are you looking for a Clergy-focused 1040 tax preparer this tax season? Visit our website at https://www.clergyfinancial.com/services/clergy-tax-preparation/how-to-get-started/ for more information.
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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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