Not to complicate things more, but remember you only need to file a separate return for your child if their income exceeds the standard deduction for dependents. For 2023 that's $1,250 for unearned income.

Just want to add something important that I learned the hard way - make sure you keep detailed records of the original gift transaction and the automatic sale/reinvestment that triggered the capital gains. The IRS may want to see documentation showing that this wasn't a deliberate sale by you as the custodian. Also, since the brokerage automatically sold and reinvested without your instruction, you might want to check if they have any liability for the unexpected tax consequences. Some brokerages have been known to help cover tax impacts when their automatic processes create unintended taxable events, especially in custodial accounts for minors. One more thing - if you're going to have ongoing similar situations with gifts to the UTMA, consider asking family members to gift cash instead of appreciated securities to avoid future kiddie tax complications. Much easier to manage!

I see everyone suggesting complicated solutions, but have you tried just asking your parents? If they claimed you as a dependent last year, they could probably just help you with this whole process. That's what I did my first time.

Hey Alejandro! I went through this exact same situation last year with TaxAct and that AGI verification step. Based on what you've described, since your parents claimed you as a dependent last year and you didn't file your own return, you should definitely enter "0" for your prior year AGI like Monique mentioned. Don't feel bad about getting stuck on this - it's honestly one of the most confusing parts for first-time filers because the software doesn't explain it clearly. The good news is once you get past this step, the rest should be much smoother! If entering "0" doesn't work for some reason, you can also look for TaxAct's "forgot my AGI" option which should give you alternatives like requesting a PIN from the IRS instead. But in your situation, the "0" should definitely work since you weren't filing independently last year. You've got this! Don't give up on doing it yourself - you're so close to figuring it out.

Here's what's probably happening: The IRS likely identified something they need to verify or adjust on your return. Instead of stressing, I'd highly recommend using taxr.ai to analyze your transcript. It uses AI to break down exactly what's happening with your return, when to expect correspondence, and most importantly - when you'll likely receive your refund. The tool has been a game-changer for understanding these complex situations. Costs $1 but saves hours of confusion and anxiety. You'll get immediate answers instead of waiting for that letter to show up. Other things you can do: - Set up USPS informed delivery - Make sure your address is current with IRS - Keep checking your transcript for updates - Don't call IRS yet - wait for the letter first Hope this helps!

I've been through this exact situation before! "Notice Issued" typically means the IRS found something on your return that needs clarification or verification. Don't panic - it's not necessarily bad news, just means they need more info or are making adjustments. The notice will explain exactly what they need from you and give you a timeframe to respond. In my case, it was just identity verification and once I sent the docs back, my refund processed within a few weeks. Keep checking your transcript for updates and make sure to respond quickly once you get the letter!

Don't forget about the financial aid implications! When your kid applies for college, 529 plans owned by parents are counted as parental assets (assessed at a max of 5.64% for financial aid), but 529s owned by grandparents or other relatives used to not count at all until the money was withdrawn. This changed recently though - starting with the 2024-2025 FAFSA, distributions from grandparent-owned 529s no longer count as student income. So the old strategy of having grandparents own the account doesn't have the same advantage it used to. But there's still a consideration with divorce - the custodial parent's finances are what matter for FAFSA. If your ex is the custodial parent and also owns the 529, it could affect financial aid differently than if you (the non-custodial parent) own a separate 529.

I went through a similar situation with my divorce two years ago. Here's what I learned: the key is understanding your state's specific rules about 529 deductions. In my case (Ohio), I had to be the account owner to claim the state tax deduction, so I ended up opening my own 529 account. One thing to consider that hasn't been mentioned yet - check if your state has a "recapture" provision. Some states will require you to pay back previous tax benefits if you change the beneficiary or if the account owner changes. This didn't affect me since I opened a new account, but it's something to be aware of if you're thinking about transferring ownership of the existing account. Also, don't overlook the investment management aspect. When you have separate accounts, you each get to choose your own investment strategy, which can actually be beneficial. My ex is more conservative with investments while I'm more aggressive, so having separate accounts lets us each manage according to our risk tolerance while still working toward the same goal of funding our daughter's education. The paperwork is a bit more complex come tax time, but it's worth it for the flexibility and potential tax benefits.

check your email spam folder. sometimes they send verification letters that get filtered out

This happened to me too - blank transcripts for almost a month after filing! Turns out the IRS was doing additional processing because I had claimed some education credits. Eventually everything showed up and I got my refund. In the meantime, you can check your "Where's My Refund" tool on IRS.gov which sometimes updates before transcripts do. Also make sure you're looking at the right tax year transcript (2024 for returns filed this year). Hang in there!