Check This First So Your Child's Stock Account Doesn't Cause Tax Problems Later!
"Even for a stock account you opened for your child, the tax assessment can differ depending on when money was deposited, whether it was reported, and how it was traded.
Especially if you have run the account for a long time or it has generated large profits, it is a good idea to review it at least once."
Check These First
✔ Your child's age
✔ When you first deposited money
✔ The total amount deposited so far
✔ Whether a gift was reported
✔ The current valuation of the account
✔ Whether the parent traded directly
1. If you deposited money in the past but did not report it
The following cases need to be checked first.
- You put money in your child's account and did not report it
- The current valuation has grown significantly
- Large investment gains have occurred
Taxes are not determined simply by the amount deposited; when the gift was made and how much the asset value has grown are also important factors.
2.Consider reporting even if no tax is due
For minor children, a gift deduction of up to 20,000,000 won is available over 10 years. So if the gift is within the deduction limit, no tax may arise.
However, just because no tax is due does not mean reporting is unnecessary.
If you report it,
- you can leave a record of the source of funds,
- you can make the timing of the gift clear, and
- it can work in your favor if the value of the stocks rises significantly in the future.
"Even if there is no tax now, if gains grow later, the outcome may differ depending on whether you reported"
3. Be careful if the parent traded frequently
Even if the account is in the child's name,
- if the parent continuously directs the trades,
- if short-term trades are repeated, or
- if it appears that the parent effectively managed the account,
it may be harder to have it recognized for tax purposes as the child's independent asset. Therefore, it is relatively safer to run a child's account as a long-term investment rather than trading frequently.
"What matters is that a child's account is not an investment account for the parent
but the child's asset"
4. If you missed the reporting deadline, review it now
In principle, it is best to check whether a report was filed within a certain period after the gift. Even if time has already passed, there is no need to give up altogether. However, it is important to check the current account value together with past deposit records. Especially for an account that has generated large gains, it is a good idea to have it reviewed once based on its current status.
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For a child's stock account, 'when the money was put in, whether it was reported, and who managed it' can matter more than 'how much was put in'