Really simple - thanks. Unfortunately Acorns take a very long time to issue them, March... holds up everything, I cannot recommend anyone opens and Acorns account.
The taxes with the Acorns Early account is a bit more complex than their individual investing accounts. But here's what I was able to find: The Acorns Early account is a UTMA / UGMA account, and it does not have the tax benefits that a traditional 529 plan offers. With Acorns Early, contributions are made with after-tax dollars. You can contribute up to $15,000 annually without incurring a gift tax ($30,000 per married couple). The first $1,100 of a child’s unearned income is tax-free. The next $1,100 is taxed at the child’s rate. Anything over that is taxed as the parent’s income. But compared to a 529 plan, UGMA and UTMA accounts provide more flexibility in how the funds can be used. To avoid a penalty with 529 plans, money needs to be used for specific educational expenses, including tuition, books, supplies and a computer. The funds in an UGMA/UTMA account can be used for anything - a car, travel, or other college-related expenses, such as application fees or health insurance.
Hey Jessica. You can find your tax documents in the settings section of your app. In the settings section you just have to click on "documents and statements." Then you will see a tab called "tax reports" 👍
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Thanks for the clear explanations - super helpful!
What about auto dividend reinvestment ? How does taxes work in that and is that bad to do for tax purposes?
Really simple - thanks. Unfortunately Acorns take a very long time to issue them, March... holds up everything, I cannot recommend anyone opens and Acorns account.
So for acorns early, the child has to pay taxes only if they withdraw the money out in the future?
The taxes with the Acorns Early account is a bit more complex than their individual investing accounts. But here's what I was able to find:
The Acorns Early account is a UTMA / UGMA account, and it does not have the tax benefits that a traditional 529 plan offers. With Acorns Early, contributions are made with after-tax dollars. You can contribute up to $15,000 annually without incurring a gift tax ($30,000 per married couple). The first $1,100 of a child’s unearned income is tax-free. The next $1,100 is taxed at the child’s rate. Anything over that is taxed as the parent’s income.
But compared to a 529 plan, UGMA and UTMA accounts provide more flexibility in how the funds can be used. To avoid a penalty with 529 plans, money needs to be used for specific educational expenses, including tuition, books, supplies and a computer. The funds in an UGMA/UTMA account can be used for anything - a car, travel, or other college-related expenses, such as application fees or health insurance.
I have acorns and don’t think I paid any taxes? How do I find the tax information from acorns? I was sent anything in the mail.
Hey Jessica. You can find your tax documents in the settings section of your app. In the settings section you just have to click on "documents and statements." Then you will see a tab called "tax reports" 👍
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