Funding another person's robinhood for investing
I've been funding my mom's robinhood account with money from my bank account. Has anyone done this and how are taxes done in this case? Who pays the taxes for the profits? #personalfinance #investments
In the eyes of the IRS you are gifting your mom money every time you put money in her account. Make no mistake - as you describe - she owns the account. It is as if you don't exist. Legally she owns everything in the account. She will receive the 1099-B tax form at end of year and have to declare the income (or be stuck with losses) on her tax return. As others mentioned, if you gift more than ~$15k (the amount changes every year) to a person in a year you have additional tax forms to file as the giver. No tax is due until you gifted many millions of dollars - although that too congress likes to change from time to time.
Are you loaning her the money or is it a gift? Your mom's taxes would be effected but I don't think yours would. She's obviously not an investment professional since she's using robinhood. If you loan her the money and she defaults, can you take a deduction for the bad debt you wrote off? I dunno! Ask a tax CPA to get real answers. I wouldn't trust blind and get audited.
Not a loan. I intended it to be a joint investment account but I realize robinhood doesn't have this option
For Robinhood, your mom is investing and will get a 1099. She has to use it to file taxes.