In most cases, a minor cannot open a savings account entirely on their own — a parent or legal guardian has to be on the account, either as a joint owner or as a custodian. That is because people under eighteen lack the legal capacity to enter binding contracts, and a bank account is a contract. So yes, a child can have a savings account, but an adult has to be attached to it, and the structure you choose affects who owns the money, how the interest is taxed, and what happens when your child grows up.
Why an Adult Has To Be on the Account
Almost every state sets the legal age for entering a binding agreement at eighteen.1Cornell Law Institute. Legal Age A bank account carries terms, fees, and obligations, and a minor’s signature alone can be voided at the minor’s discretion. That is more risk than banks will accept, so they require a legally accountable adult on the account.
Federal rules reinforce this. Under the Customer Identification Program, when a parent opens an account for a child, the parent is the bank’s customer for identity-verification purposes.2Financial Crimes Enforcement Network. FAQs Final CIP Rule A few institutions will let an older teen open an account independently, in which case the bank verifies the teen’s identity instead, but the more common setup is that the adult is the verified party.
Joint Account or Custodial Account
Banks offer two main structures for a minor’s savings, and they are not interchangeable.
Joint Accounts
A joint account makes the adult and the child co-owners with equal access. Either party can deposit or withdraw, and the balance is generally treated as shared property. It works well for teaching a teenager how to manage money and for shared savings goals.
The catch is control and exposure. Because the adult is a full owner, they can withdraw the entire balance without the child’s permission. And because the law typically presumes equal ownership, a creditor with a judgment against the adult may be able to freeze or seize money in the account, including deposits the child made. Some states cap creditor access at half the balance; others allow the full amount. Tracing specific deposits back to the child is possible but rarely easy.
Custodial Accounts Under UGMA or UTMA
Custodial accounts under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) work differently. The money belongs to the child from the moment it lands in the account. The adult acts only as a custodian, managing the funds for the child’s benefit.3Legal Information Institute. Uniform Gifts to Minors Act (UGMA) UGMA accounts hold cash and securities; UTMA accounts can also hold tangible property such as real estate.
Contributions are irrevocable gifts. Once money is in, you cannot take it back for your own use. The custodian is held to a prudent-person standard, and courts have ordered custodians to reimburse accounts with interest when funds were spent on the parent’s expenses or used to cover obligations the parent already owed, such as child support.
Gifts to a custodial account fall under the annual gift tax exclusion, which is $19,000 per recipient for 2026.4Internal Revenue Service. Whats New Estate and Gift Tax Contributions at or below that amount do not trigger federal gift tax reporting.
What You Need To Bring
Banks must collect a name, date of birth, address, and taxpayer identification number for each person on the account.5Federal Deposit Insurance Corporation. FFIEC BSA AML Examination Manual Customer Identification Program For most people the taxpayer ID is a Social Security number. If the child does not have one, an Individual Taxpayer Identification Number (ITIN) or a passport number with country of issuance can serve as a substitute at many institutions.6Consumer Financial Protection Bureau. Can I Get a Checking Account Without a Social Security Number or Drivers License
The adult needs a valid government-issued photo ID such as a driver’s license or passport. Verification for the child is more flexible, because children rarely have photo IDs. Banks can accept a birth certificate, a school ID, or in some cases a teacher’s confirmation of identity under the risk-based verification rules.2Financial Crimes Enforcement Network. FAQs Final CIP Rule
How To Actually Open It
Most banks accept applications online or in person. Online, you fill out a digital form and upload copies of the identification documents. In person, a banker can review originals on the spot, which sometimes helps when the child’s documents are nonstandard, such as a school ID rather than a birth certificate.
An initial deposit is usually required. Minimums vary but often fall between $25 and $100. Many youth savings accounts waive monthly maintenance fees entirely, or waive them for holders under a certain age, often eighteen or twenty-five. Compare fee structures before you commit: some accounts charge a monthly fee unless you keep a minimum balance or set up automatic transfers, and some charge nothing regardless of balance.
How the Interest Gets Taxed
Interest earned in a child’s savings account is taxable income, and the IRS applies specific rules based on the amount.
When the Child Has To File
A dependent child with unearned income (interest, dividends, and similar earnings) above $1,350 is generally required to file a federal tax return.7Internal Revenue Service. Dependents Standard Deduction and Filing Information Most children with a plain savings account will not reach that threshold on interest alone. Add a custodial investment account paying dividends and the numbers can climb quickly.
The Kiddie Tax
Once a child’s unearned income exceeds $2,700, the excess is taxed at the parent’s marginal rate rather than the child’s lower rate. This is known as the kiddie tax.8Internal Revenue Service. Topic No 553 Tax on a Childs Investment and Other Unearned Income Kiddie Tax It applies to children under nineteen, or under twenty-four if they are full-time students, and it exists to prevent parents from parking large investment balances in a child’s name for the lower rate.
Reporting the Child’s Income on Your Return
If the child’s only income is interest and dividends and the total is under $13,500, you can report it on your own return using Form 8814 instead of filing a separate return for the child. That is simpler but costs slightly more, up to $135, because the first $1,350 of the child’s income that would otherwise be tax-free gets taxed at 10% under this election.9Internal Revenue Service. Instructions for Form 8814 For small savings balances, the convenience usually wins.
The Financial Aid Trade-Off
The account type affects college financial aid. The federal formula assesses student-owned assets at 20%, meaning one-fifth of the balance is expected to go toward education costs each year. Parent-owned assets are assessed at a lower effective rate, up to roughly 12% of discretionary net worth after an asset protection allowance.10Federal Student Aid. Student Aid Index SAI and Pell Grant Eligibility
Because UGMA and UTMA balances legally belong to the child, they show up on the FAFSA as student assets and get the 20% treatment. A $10,000 custodial balance can reduce aid eligibility by around $2,000 per year. A parent-owned 529 plan, by contrast, is treated as a parent asset and hits aid eligibility less. If college saving is your real purpose and you expect to apply for need-based aid, a 529 is usually the friendlier vehicle.
What Happens When Your Child Turns 18
A joint account does not change automatically. The parent and the now-adult child remain co-owners until someone acts. Families often close the joint account and open an individual account in the young adult’s name, or ask the bank to remove the parent if the bank allows it.
A custodial account is different. Once the child reaches the termination age set by state law, the account must be handed over. In most states that age is eighteen or twenty-one, and some states let the custodian specify a later age, up to twenty-five, when the account is created.11Social Security Administration. POMS SI SEA01120.205 The Legal Age of Majority for Uniform Transfer to Minors Act UTMA At that point the custodian’s authority ends and the young adult gets unrestricted access. You cannot extend the custodianship or impose conditions on how the money is spent after the transfer. If that concerns you, talk with an attorney before opening the account, because moving funds out of a UGMA or UTMA later can create tax and legal complications.