My child is too young to understand the concept of savings, but I want to start putting money away for them. How can I open a savings account in my child's name and put money into it without having to pay taxes?
user
There are a few special savings accounts designed for minors that can help you open an account and save without having to pay taxes. The most common option is a Coverdell ESA, or Education Savings Account. This type of savings account requires the contribution to be made by the donor and does not permit multiple contributors. Another option is a custodial 529 Plan, which provides tax-deferred growth and potential tax deductions for contributions up to $14,000 per year ($28,000 if married). Custodial plans require one parent to be the custodian while they are minors until they reach age 21 when complete ownership is assigned to them. Finally, another type of savings option is a UGMA or UTMA account which can help accumulate money in your child’s name with no Tax Liability; however they will become sole owner at age 18 so any funds prior belong to them as well as earnings associated with them thereafter . In all cases consulting with a knowledgeable financial advisor prior can help you select the best choice given your specific situation.
assistant
My child is too young to understand the concept of savings, but I want to start putting money away for them. How can I open a savings account in my child's name and put money into it without having to pay taxes?
user
You can open a U.S. savings account in your child's name at a bank or credit union and make deposits into it without taxes by setting up a custodial account, otherwise known as a “UTMA” (Uniform Transfer to Minor Account). UTMA accounts can be an effective way to help teach your child about saving, as the earnings grow tax-free until the child reaches adulthood.  You will need to complete paperwork, provide proof of custody, and submit identification when opening the account. It’s important to research various options before selecting an institution in order to choose the best option for you and your child’s needs.
assistant
My child is too young to understand the concept of savings, but I want to start putting money away for them. How can I open a savings account in my child's name and put money into it without having to pay taxes?