Can I File a Cashed Out UTMA on My Taxes?

The Uniform Transfers to Minors Act allows an adult to give gifts such as shares of stock or mutual funds to a minor. Each year, the Internal Revenue Service taxes the capital gains from the UTMA, which is paid by the minor child if the gains exceed the standard deduction for a dependent. If the capital gains exceed double the child standard deduction, the child must pay the adult rate. Once the child reaches the age of majority, which is 18 or 21 depending on the resident state, the child can cash in the UTMA and pay taxes on the gains at the adult tax rate. How the taxes are filed depends on the IRS form received by the UTMA holder.

1099-MISC

Step 1

Look at Box 1, 2, 3 or 7 of Form 1099-MISC that you received from the institution that held your UTMA. If there are amounts listed in more than one box, add the amounts together. If the amounts listed in the boxes equal more than the adult standard deduction, you have to file income taxes. As of 2013, the standard deduction for a single adult is $5,950 or $11,900 for married.

Step 2

Download Form 1040 and Schedule C from the Internal Revenue Service website.

Step 3

Enter the total amounts from Box 1, 2, 3 and 7 on 1099-MISC in the line labeled "Other Income" on Schedule C.

Step 4

Complete Schedule C and enter the amount of your gain or loss in the line labeled "Business Income or Loss" on Form 1040.

1099-B

Step 1

Look at Box 2 and Box 3 of Form 1099-B that you received from the broker or barter that held your UTMA. Subtract Box 3 from Box 2 to determine your capital gain. If your capital gain is more than the adult standard deduction, you have to file income taxes.

Step 2

Download Form 1040, Form 8949 and Schedule D from the IRS website.

Step 3

Complete Columns A through H on Form 8949 using the information from Form 1099-B. If you owned the security for less than a year, use Part I. If you owned the security for more than a year, use Part II.

Step 4

Transfer the total amount of your capital gain or loss to Schedule D and complete Schedule D.

Step 5

Transfer the final amount on Schedule D to the line labeled "Capital Gain" on Form 1040.

1099-DIV

Step 1

Look at Box 1, Box 2 and Box 2a of Form 1099-DIV that you received from the institution that held your UTMA. Add all three boxes together to determine your income from the investments. If your income is more than the adult standard deduction, you have to file income taxes.

Step 2

Download Form 1040 and Schedule B from the IRS website.

Step 3

Complete Schedule B if the amount of your dividend income from Form 1099-INT is more than $1,500. On schedule B, you must describe the dividend income you received.

Step 4

Transfer the final amount from Schedule B to the line labeled "Ordinary Dividends" on Form 1040. If your dividend income did not exceed $1,500, do not complete Schedule B and transfer the amount from Box 1 on Form 1099-DIV to the "Ordinary Dividend" line on Form 1040. Transfer the amount from Box 1b on Form 1099-DIV to the "Qualified Dividends" line on Form 1040.

1099-INT

Step 1

Look at Box 1of Form 1099-INT that you received from the institution that held your UTMA. If your interest is more than the adult standard deduction, you have to file income taxes.

Step 2

Download Form 1040 and Schedule B from the IRS website.

Step 3

Complete Schedule B if the amount of your interest income from Form 1099-INT is more than $1,500. On schedule B, you must describe the interest income you received.

Step 4

Transfer the final amount from Schedule B to the line labeled "Taxable Interest" on Form 1040. If your interest income did not exceed $1,500, you do not have to complete Schedule B. Report the interest income on the "Taxable Interest" line on Form 1040.

Tip

  • If you receive any other tax forms or need assistance filing your income tax return, contact an income tax specialist.
  • Because the donor paid gift tax on the UTMA when it was initiated, you only have to pay taxes on the capital gain from the previous year.

About the Author

Angela M. Wheeland specializes in topics related to taxation, technology, gaming and criminal law. She has contributed to several websites and serves as the lead content editor for a construction-related website. Wheeland holds an Associate of Arts in accounting and criminal justice. She has owned and operated her own income tax-preparation business since 2006.

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