UTMA Account Transfer Back to Custodian

[oriolesno9]

My question involves personal finance in the State of: Virginia

Hi, I am recently married and filing our 2010 taxes. My husband showed me an account he has with his father, for which the interest income needs to be included in our 2010 taxes. The documents say:
__Father's name__ C/F
__Husband's name__ UTMA/VA
until age 18

My husband is in his 20s now, and says this is his father's money, put in the account for his own college purposes. My husband graduated without needing the funds for college, so money remains in this account. Since we discovered this money is being taxed under my husband's SS# (but according to my husband, the money is not his), my husband said he would talk to his father about transferring the money back. Apparently the transfer is completed now and I'm awaiting paperwork saying as much, for when we file our 2011 taxes.

I've googled around about UTMAs and I'm confused about whether this is actually okay and satisfies legal obligations. Any feedback would be appreciated. Thank you!

[Mr. Knowitall]

An UTMA gift is not "dad's money in junior's account" - it's junior's money. Junior owes taxes on the income from the money while it remained in his account, and depending on the amounts involved may have to file an advisory gift tax return showing that he gave the money to his father.

[jk]

an UTMA is an irrevocable transfer to the minor child. It is controlled by the custodian which is often the donor until the donee reaches whatever age the particular state lists as the age which the account then becomes available to the donee. In Virginia, I believe it is 18. At that time, the money became available to your husband to do with as he wishes.

If your husband wishes to gift the money back to his father, it will be treated as any other gifting between relatives, as far as the IRS is concerned.

[flyingron]

How much money are we talking about here?
If it's under $13K, just give it back. No forms are required. No tax is due the recipient.
Actually, since you two are married, you can probably each give dad $13K and fit under the exclusion.
Above that you'll have to file a gift tax, but no tax is due unless we're talking millions here.


You don't indicate what the nature of the account is. If there are appreciated stocks in it, you may owe capital gains tax on cashing out. You'll want to compute that before giving the residue back to dad.