Hello,
I am the beneficiary of a custodial account that was opened in 2001.
From 2001-2013 the account was in the same mutual fund. No money was withdrawn in this account.
I am 25 yr old, and at 24, I was still a student. I am no longer a student.
In 2001, there was a long-term capital gain distribution. For 2011, there was a taxable dividend. In 2013, there was an “exchange” where it moved from the fund into a money market account – for around three months. Later in 2013, it was exchanged into another mutual fund that it is still in today. Since 2014, there has been a long-term capital gains distribution.
The way the statements read is its “total income” which is the capital gains distribution, and the actual change over time for the mutual fund. There are no other reported numbers. These capital gains have been DRIP back into the fund for each time a dividend was distributed.
The tax forms received were as follows:
2001: 1099-DIV
2011: 1099-DIV
2013: 1099-B
2014: 1099-DIV
2015: 1099-DIV
2016: 1099-DIV
2017: 1099-DIV
After doing some research, it seems that I am responsible for the taxes since the account is under my SSN. I have been a minor on this account up until last week, when it was officially transferred into my name as the sole owner.
I am in the bottom two tax brackets. I’ve read that this is beneficial for long-term capital gains distributions.
Reddit, my specific questions to you are:
1) For each 1099-DIV, those were to be reported during that tax year when the form was mailed out and reported/paid for that tax year. Since the dividends were automatically re-invested, this should count as a “deposit” at this point since the taxes were paid during that year.
2) For the 1099-B, the exchange between a broker, there was the “sales less expenses” and “cost-basis”. As far as I know, the exchange is the same thing as selling the mutual fund and buying new shares, which means the change in value from 2001-2013 was paid for during that year as reported on the 1099-B.
3) Assuming the above, if I were to withdraw the money today, the only amount I would be taxed on is the change in value from 2013-today since the long term capital gains were paid for each tax year already and the taxes were already paid for the year during the exchange?
4) What if none of these taxes were paid or reported on the tax returns for those years? What do I need to do? Should I expect the IRS to contact me and pay past debt very soon? If I were to withdraw at any point would that raise a flag and at that point I would need to pay taxes for all of it?
If you could please clarify for me that would be greatly appreciated. Let me know if any information you need is missing from the above, feel free to PM me as well. It is my understanding that while the forms were sent, none of these taxes have been paid.
I am trying to best to understand the amount I would be taxed if I withdrew today, and any penalties or possibilities that could arise from this situation.
Submitted May 30, 2018 at 08:41AM by sneaky_kinky_cat https://ift.tt/2LLbJzx
