Do kids have to pay taxes on the interest of certificates of deposit?
Friday, February 5th, 2010
fradertoadie asked:
I don’t know much about cd’s except that they earn better interest than savings accounts. My 13 year old daughter received a settlement for a dog bite that she suffered.
It is court ordered that it be placed into a trust or account of some sort that cannot be touched by anyone. She gets it when she turns 18.
Right now it is in a savings account but I want to change it to a cd so she can earn better interest. Someone told me that as her parents, we would have to pay taxes on the interest. That makes no sense since we do not benefit from this money. Do we have to pay it or does she have to pay it later?
I don’t know much about cd’s except that they earn better interest than savings accounts. My 13 year old daughter received a settlement for a dog bite that she suffered.
It is court ordered that it be placed into a trust or account of some sort that cannot be touched by anyone. She gets it when she turns 18.
Right now it is in a savings account but I want to change it to a cd so she can earn better interest. Someone told me that as her parents, we would have to pay taxes on the interest. That makes no sense since we do not benefit from this money. Do we have to pay it or does she have to pay it later?