My mom setup a UGMA account a long time ago. She only put in $500 into it and today it's worth $2300. Actually its been fluctuating the past three years. At the end of one year, it was worth $2200. The following year, $1900, and the end of last year $2300. I'm now 24 years old and I'm entitled to use the funds for any purpose. I'm not sure how taxes work in UGMA accounts. I think you pay taxes on it every year on any earnings. I don't think they grow tax-deferred. Is my information correct?
If I withdraw funds from it, will I pay any income taxes on it?
They are not tax deferred vehicles - taxes should have been paid (at the lower Minor's rate) for any proceeds. If you withdraw funds, you won't have to pay taxes on the withdrawal, but you will have to open your own account. |
