Frum.Finance

I have a custodial account for my minor daughter at Ally and my daughter just got a 1099 saying they witheld federal taxes from her account! Why would they do that?

If the interest is greater than 10k, that is expected.

Sounds like a bug then... I'd call them. But probably not worth the phone call :man-shrugging:

I figured it out. They claim we forgot to submit the signature card that certifies that we're not subject to backup witholding

Oh interesting! Can you explain that more?

I got to fix this. I don't want my 12 year old to need to file taxes every year

&gt; if the primary account owner's Taxpayer Identification Number (TIN) is not certified within 60 calendar days of account funding Ally is required to start withholding tax from interest income earned, referred to as backup withholding (BUWH), on the 61st day.
&gt; 2:34 PM
&gt; BUWH will stop when the customer has certified their TIN within AOS or by mailing Ally a completed signature card.
from their chat based customer service

btw custodial savings accounts for kids can be linked to zelle and cashapp, but that's a subject for another thread and time

my kids do a lot of babysitting and its convenient when they can get paid directly

&gt; If the interest is greater than 10k, that is expected.
&gt; 
<@U04EQ1L14HG> I'd love to meet the parent with a custodial savings account for a child earning $10k interest/year :joy:

I didn't want to make any assumptions :joy: