<p>My kids have treasury bills that have matured and we have been sent checks. We want to use half the $$ this year and half next year. Can we deposit the checks into our account to write a check to the college, then purchase a CD in the kid’s name to hold the rest for next year or will passing the money through our checking account be a problem?</p>
<p>Will we or the kids be liable for taxes if the money is passed through our checking account?</p>
<p>Thanks!</p>
<p>It’s ok to have your kids’ money pass through your accounts as long as you have a paper trail that it was spent for their benefit. Of course, if you deposit the money in your savings account and earn interest you’ll be paying taxes on that interest, but if it goes through a checking account there’s no tax liability. </p>
<p>If the amount is over $26,000 per kid, to avoid the possibility of gift taxes you might want to just deposit the checks directly into the kids’ checking accounts (if they don’t have one, you can open a student account in their names). Then from there they can purchase CDs and/or pay for college. Gift taxes are paid by the giver on any gift over $13,000 per year ($26,000 per couple), with a lifetime cap of some large amount that I can’t remember offhand. In your case this isn’t a gift; this is the kids’ money, but if audited by the IRS you might have to prove that.</p>
<p>I withdraw from my son’s 529, have the money transferred into my individual brokerage account, then transfer from there to my son’s checking account for him to pay tuition/room & board. It’s not an issue as long as the dollar amounts are all the same.</p>
<p>Thanks, makes sense. Safely under the limit.</p>