Realized Losses UGMA/UTMA

We recently sold some of the mutual funds that were held in our children's UTMA/AGMA accounts. The sale resulted in a realized loss. The children are 16/14/11. None of the children have any income from jobs. There will probably be income from acreation in some zeros as well as some interest, dividens and realized gains in mutual funds.

If the losses exceed the income will the children receive a taxe refund for the loss realized on the mutual fund sales?

You cannot get a refund because of capital losses. They can be used to offset other income on the tax return.

You may want to file a return so they have the loss to carry forward to another year when they do have income though.

MADC,

Jim_Ohio has it right. We only get a refund when our refundable tax credits plus what we have paid is more than our tax bill.

You will want to file a 1040 for each child showing their capital loss or gain on on Schedule D.
If a Schedule D loss, that will be a negative number on 1040 line 13 up to $3,000, and will reduce the child's other income. If they do not need the $3,000 reduction the capital loss can be carried over to future years to be used first to offset capital gains and then up to the $3,000 per year of other income.

There is some talk in congress of raising the $3,000 per year limit for offsetting other income.

Thanks, my guess is that this will unfortunately be a hot topic for the next 6-months