Shughart
DIS Veteran
- Joined
- Apr 13, 2013
I am hoping someone has been through this and can offer some insight.
Both of my children have inherited from their great grandmother and we've gotten some paper work giving us several options. We were hoping to take the lump sum and start 529 plans for both of them. The paperwork came addressed to them C/O custodian.
Now when we fill out the forms, and send them in, they will be sending a check. It also notes that they will be sending the IRS a 1099-R. Will the tax forms be in the kid's names? Or ours as custodians? Will the checks come in the kid's names? Can they even sign and deposit checks?
Would we then have to file taxes for the kid's next tax season, or would we file their forms on our return? Could there be additional federal tax liability (I know they could be subject to state income tax). I am wondering if it would be smarter to deposit the checks into savings accounts in their names, wait out the tax season, to see if anything additional is owed off of it, and then open 529 plans for them.
I know this is a lot and I should consult a professional. You guys are just my first stop. My next stops will be my husband, and his CPA LOL. But you guys are more easily accessible and I AM OVERWHELMED
Both of my children have inherited from their great grandmother and we've gotten some paper work giving us several options. We were hoping to take the lump sum and start 529 plans for both of them. The paperwork came addressed to them C/O custodian.
Now when we fill out the forms, and send them in, they will be sending a check. It also notes that they will be sending the IRS a 1099-R. Will the tax forms be in the kid's names? Or ours as custodians? Will the checks come in the kid's names? Can they even sign and deposit checks?
Would we then have to file taxes for the kid's next tax season, or would we file their forms on our return? Could there be additional federal tax liability (I know they could be subject to state income tax). I am wondering if it would be smarter to deposit the checks into savings accounts in their names, wait out the tax season, to see if anything additional is owed off of it, and then open 529 plans for them.
I know this is a lot and I should consult a professional. You guys are just my first stop. My next stops will be my husband, and his CPA LOL. But you guys are more easily accessible and I AM OVERWHELMED