“Yours” meaning the child’s? Then how does the below statement from your next post make any sense?
Once more…does anyone know who will e receiving the 1098 form for,this SS money? I’m thinking that is the person who will need to declare this as income.
@BelknapPoint Here is what I think I know: “The SS benefit is yours but is paid to your family”. The money is meant for the child. If the child doesn’t have other income, then the child pays no tax on the money. It is paid to the parent. It isn’t considered income for the parent, but the parent can spend it on the child’s upkeep or invest it in an account that has the child’s name on it. (Don’t ask me why that is the rule, it’s strange, I only know that’s how it has worked for us) I don’t know exactly what happens when a child turns 18 - if those tax rules fly out the window.
(Since I put my foot into this, might as well put my cards on the table) My kiddo gets a tax form with her social security $$$ listed on it at the end of each year. She pays no tax on it. It is not considered part of my income. The money is paid to me and I decide how it will be spent. I’ve put the majority of it in a 529 in both our names. If it was just a regular savings account, all that money would become “hers” when she was either 18 or graduated high school.(or whichever comes last/first???) I would have no control over what she did to the money. That’s partially why I got permission (years ago) to put it into a 529. That way the money could only be used for college, sort of.
My completely amateur opinion is that if that money went into a 529 before Jan1, it would be cool by the IRS. Some how, I think if the financial year ticks over with it in a checking account, maybe it will be seen as fair game by the FA people. I wish I knew the answer to that
Which means it’s your kid’s money.
The money is “paid” to you because you daughter is a minor. If the money is spent, it must be for her benefit. You are acting as a custodian or trustee, with a fiduciary duty.
A 529 account can only have one beneficiary. I assume you mean that your daughter is the beneficiary and you are the account owner. In my opinion, the 529 account should have been set up as a custodial account, meaning you are the custodian with control of the account, and can decide how the money is spent (but only for the benefit of your daughter) until your daughter reaches the age of majority, which varies by state (usually it’s 18 or 21). Once the minor beneficiary reaches the age of majority, the custodian turns control of the account over to the beneficiary.
It is her money, so it’s right that she should have control over it when she reaches the age of majority, no matter what kind of account or investment vehicle the funds are in.