● Fund an IRA. Give your children or grandchildren an early start on a comfortable retirement. For 2015, you can contribute the lower of $5,500 or the earned income of the child to an IRA.
● Fund a 529 education account.
Contributions to a Section 529 college savings plan grow
tax-free and withdrawals are tax-free when used to pay qualified education
expenses of the account beneficiary.
● Fund a Coverdell education
savings account. You can contribute up to
$2,000 annually to a Coverdell. These IRA-like accounts grow tax-free, though
the total amount of your gift may be limited, depending on your income.
● Fund a custodial account.
Want to encourage an interest in saving and investing? Buy shares in a mutual
fund and combine the gift with a book on investing. Your child can watch the
investment grow over time and enjoy dividend payouts too. Modest amounts of
investment income can be tax-free to children, although the kiddie tax may
apply at higher levels.
Call
us at (518) 798-3330 to review the tax issues related to these financial gifts.
