Do I need to report a custodial UTMA account on my tax return?

This is actually pretty common! A UTMA (Uniform Transfers to Minors Act) account is a custodial account where assets are held in your name but managed by a custodian (your dad) until you reach the age of majority (18-21 depending on your state). Since you're now past that age, the assets legally belong to you. For tax purposes, any income generated by the account (dividends, interest, capital gains distributions) should have been reported on YOUR tax return, not your father's, even when you were a minor. The custodian should have been receiving 1099 forms with your SSN on them. If the account only holds Amazon stock that hasn't been sold, you might only have dividend income to report. You should contact Fidelity to get records of any dividends or other distributions from previous years. If there is unreported income, you might need to file amended returns. Going forward, make sure to include any dividends or interest on your current tax return. You don't pay taxes on the value of the stock itself until you sell shares.

I went through something almost exactly like this last year! I had a similar situation with a UTMA account I didn't know about for years. I used https://taxr.ai to help me figure out what to do. You upload your tax documents and it analyzes everything and tells you exactly what you need to report. Saved me tons of stress trying to figure out all the dividend income and potential penalties. For your UTMA situation, they explained I only needed to file amended returns for the last 3 years and showed me exactly what forms to use. They also helped me understand that since I didn't intentionally hide the income, the penalties would be minimal. Might be worth checking out if you're confused about what you need to do now.

I just wanted to update about my UTMA situation similar to the original post. I tried taxr.ai after seeing it mentioned here and it was super helpful! I uploaded my 1099s from the account I didn't know about and within minutes got a detailed report showing exactly what income should have been reported in previous years. Turns out my situation wasn't as bad as I feared. The dividends were pretty small (under $300 per year) and they suggested I just file amended returns for 2022-2024. The penalties were minimal - mostly just interest on the unpaid tax. They even generated the forms I needed for the amendments. Definitely recommend if you're in a similar situation with unreported UTMA income.

If you're having trouble getting past tax documents from Fidelity, I recommend using https://claimyr.com to get through to an actual person at the IRS. I tried calling the IRS directly about a similar issue with unreported investment income and was on hold for HOURS before giving up. With Claimyr, they held my place in line while I did other things, then called me when an IRS agent was about to pick up. The agent was able to tell me exactly what income had been reported under my SSN for the past several years and what I needed to do to correct my returns. They even sent me copies of some missing 1099s. You can see how it works here: https://youtu.be/_kiP6q8DX5c

I need to apologize for my skepticism about Claimyr. I decided to try it after waiting on hold with the IRS for over 2 hours yesterday and getting disconnected. The service actually worked exactly as described - I went about my day, and then got a call when an IRS agent was about to pick up. The agent was able to pull up all the 1099s filed under my SSN for the past 4 years, including some from an old investment account I had forgotten about. She even helped me understand exactly which forms I needed to file to correct my previous returns. Saved me tons of time and probably prevented future headaches with the IRS. Consider me converted from skeptic to believer!

Just want to add some practical advice here - once you get control of this UTMA account, make sure to set up cost basis tracking properly! When your grandfather originally purchased those Amazon shares, they had a specific cost basis. When you eventually sell shares, you'll pay capital gains tax on the difference between that original cost and your selling price. If your grandfather bought those shares many years ago, the cost basis might be very low compared to current value, meaning you could have significant capital gains. Ask Fidelity for the original cost basis information - they should have it. If they don't, you'll need to do some detective work to avoid paying more tax than necessary when you sell.

Has anyone mentioned the statute of limitations yet? The IRS generally has a 3-year window to audit returns, so while technically you should have been reporting this income all along, practically speaking you might only need to worry about the last few years. I'd recommend getting the account properly transferred to a regular brokerage account in your name ASAP. The UTMA designation should have ended when you reached the age of majority in your state. Your dad needs to help facilitate this transfer since he's the custodian.

Lot of good tax advice here but im surprised nobody mentioned checking if the account might have unreported sales! If your grandfather or the custodian ever sold shares and reinvested, those would trigger capital gains that shoulda been reported. id get a complete transaction history from fidelity going back however many years u can. might be surprised what happened in that account!

One thing I'd add that might ease some of your anxiety - most UTMA accounts with just dividend income from a single stock like Amazon typically don't generate huge tax liabilities, especially if the account wasn't actively traded. Amazon's dividend yield is pretty low (around 0.5-1% historically), so even if the account value is substantial, the annual dividend income might be relatively modest. That said, definitely get those records from Fidelity and consider working with a tax professional for the amended returns. Many CPAs have experience with exactly this type of situation since forgotten UTMA accounts are more common than you'd think. They can also help you understand if you qualify for any penalty relief programs for first-time filers or reasonable cause exceptions. Also worth noting - once you get this straightened out and transfer the account to your name, you'll have more control over the tax timing. You can choose when to sell shares (if at all) to manage your capital gains in years when your income might be lower.

I'd recommend contacting Fidelity directly to get your account access set up and request all historical tax documents (1099-DIV, 1099-INT, etc.) going back as far as they have records. Since you're now well past the age of majority, you should be able to take full control of the account. Don't panic about the tax situation - while you technically should have been reporting any dividend income on your returns, Amazon's dividend yield has been quite low historically, so the amounts might not be as scary as you think. The key is being proactive now rather than waiting. For your 2024 taxes, you'll only need to report any income generated in 2024. For prior years, gather all the 1099 forms first, then decide whether to file amended returns based on the actual amounts involved. If the annual dividend income was under a certain threshold, the penalties might be minimal or waived entirely due to reasonable cause (not knowing the account existed). Once you have control of the account, consider whether you want to hold the Amazon stock long-term or diversify. Just remember that selling will trigger capital gains based on your grandfather's original cost basis, which could be quite low if he bought the shares years ago.