How to Send Money to Someone Under 18: Accounts, Apps, and Taxes

Sending money to someone under 18 almost always requires an adult to stand between the money and the child, because minors generally cannot open financial accounts or sign binding contracts on their own. The right method depends on what the money is for: a peer-to-peer app handles a birthday transfer in seconds, a joint bank account fits allowance and chore money, a custodial account holds larger gifts and investments, and a 529 plan is built for education. The child owes no income tax on any gift you send,¹ and you can give up to $19,000 per child in 2026 before any gift tax paperwork applies to you.²

Peer-to-Peer Apps for Quick Transfers

For everyday amounts — allowance, a birthday gift, chore payments — the fastest route is a teen account on a payment app. Both Venmo and Cash App offer these for ages 13 through 17, linked to a parent or guardian’s verified account.

Venmo Teen accounts give the child a separate balance while the parent keeps visibility over every transaction and receives notifications when the teen sends or receives money.³ Cash App’s sponsored accounts work the same way, letting the parent view balances, see real-time transactions, set spending limits, manage feature access, and schedule recurring allowance deposits.⁴ Both platforms issue debit cards tied to the teen’s balance, so the money works at physical stores as well as online.

Each platform sets its own daily and weekly caps on sending and receiving, and the exact limits depend on the teen’s verification level. Neither service is available for children under 13.

Joint Bank Accounts

A joint checking or savings account is the simplest traditional option. Most banks won’t let a minor open an account alone, but they will let a parent or guardian open one jointly. Both names are on the account, both can deposit and withdraw, and the child usually gets a debit card once they’re old enough, typically at 13 depending on the bank.

The advantage is that there’s no special legal structure and no paperwork beyond opening the account. The drawback is that joint ownership runs both directions: the child’s balance could theoretically be exposed to the adult’s creditors, and the adult is liable if the child overdraws. Joint accounts work well for allowance and small savings. For anything larger, a custodial account gives the money better protection.

Custodial Accounts (UGMA and UTMA)

Custodial accounts under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act are the standard vehicle for moving meaningful sums or investments to a child. The assets belong to the minor from the moment they’re deposited, but an adult custodian manages the account until the child reaches the age of majority.⁵

The practical difference between the two is what they can hold. UGMA accounts are limited to financial assets like cash, stocks, bonds, and mutual funds. UTMA accounts can also hold real estate, fine art, patents, and other tangible property.⁵ Both are available at virtually every brokerage and most banks.

To open one, you’ll need the child’s full legal name, date of birth, and Social Security number or taxpayer identification number. Federal law requires financial institutions to verify the identity of every account holder, including minors, through a Customer Identification Program, which may involve a student ID, a birth certificate, or other documentation.⁶ The Social Security number is also needed for tax reporting on any investment income the account earns.

Two features of custodial accounts are worth understanding before you fund one. First, the gift is irrevocable; you can’t take the money back. Second, when the child reaches the termination age set by state law, they gain full, unrestricted control over the entire balance, whatever your view of their readiness.⁷ That age is usually 18 or 21. Some states let the donor specify a later termination age at the time of the gift, with a few allowing 25 or even 30. Check your state’s statute before funding the account if the age matters to you.

529 Plans for Education

If the money is meant for school, a 529 plan almost always beats a custodial account. Contributions grow tax-free, and withdrawals used for qualified education expenses — tuition, fees, books, room and board — come out tax-free.⁸ Pull money out for non-education purposes and you’ll owe income tax plus a 10% penalty on the earnings portion.

The annual gift tax exclusion applies to 529 contributions the same as any other gift, but 529s have a unique accelerated option. You can front-load up to five years of annual exclusions in one contribution, letting a single donor put in up to $95,000 per beneficiary at once, or a married couple up to $190,000, without triggering gift tax.⁸ You’ll report the election on Form 709 for each of the five years, but no tax is owed.

Since 2024, unused funds in a 529 account that has been open at least 15 years can be rolled over into a Roth IRA for the beneficiary. The rollover is capped at the annual Roth IRA contribution limit each year and cannot exceed $35,000 over the beneficiary’s lifetime.⁹ A 529 opened for a newborn today can eventually seed a retirement account if the education money isn’t fully spent.

Trusts for Larger or Controlled Transfers

When the amount is large enough to justify legal fees, or when you want control over how and when the money is distributed, a trust offers what custodial accounts can’t. An irrevocable trust can direct the trustee to pay only for education until age 25, release a portion at 30, and distribute the rest at 35, or follow any other schedule. Conditions are possible too, such as requiring the beneficiary to complete a degree before receiving a lump sum.

The tradeoff is cost and complexity. Establishing a trust requires an attorney, and ongoing administration involves separate tax filings. For routine gifts, a trust is overkill. For grandparents transferring significant wealth or anyone worried about a young adult gaining unrestricted access to a large sum at 21, it’s worth a conversation with an estate planning attorney.

What the Sender Owes in Gift Tax

The federal gift tax falls on the giver, never the recipient. In 2026, you can give up to $19,000 to any individual, including a minor, with no tax and no paperwork.² That limit is per recipient per year, so a grandparent with four grandchildren can give $76,000 a year with no filing at all. A married couple can each give $19,000 to the same child, doubling the effective exclusion to $38,000.

Cross the $19,000 threshold to a single recipient in a calendar year and you’re required to file Form 709 by April 15 of the following year.¹⁰ Filing doesn’t mean you owe tax. The excess simply counts against your lifetime gift and estate tax exemption, which stands at $15,000,000 per person in 2026.² Most families never approach that ceiling, but the annual exclusion still matters because exceeding it creates a filing obligation you don’t want to miss.

Tax on the Child’s Investment Earnings

The gift itself is tax-free to the child, but investment income the money later generates can be taxed. If a minor’s unearned income (dividends, interest, capital gains) exceeds $2,700 in 2026, the excess is taxed at the parent’s marginal rate rather than the child’s.¹¹ This is the kiddie tax, and it exists to keep families from shifting investment income into children’s lower brackets.

The first $1,350 of the child’s unearned income is covered by the standard deduction and owes no tax. The next $1,350 is taxed at the child’s own rate, which is usually very low. Only the amount above $2,700 gets taxed at the parent’s rate. For a small custodial account, this rarely comes into play. It becomes relevant once the account grows into five or six figures and starts throwing off meaningful income.

How the Choice Affects Financial Aid

The account type also has a direct effect on college financial aid. The FAFSA formula treats a custodial account as the student’s asset and assesses it at 20%, so every $10,000 in a UGMA or UTMA reduces aid eligibility by about $2,000. A parent-owned 529 is treated as the parent’s asset and assessed at a maximum of 5.64%, cutting aid eligibility by only $564 per $10,000.

The gap is real money. A custodial account with $50,000 reduces aid eligibility by roughly $10,000. The same $50,000 in a parent-owned 529 reduces it by about $2,820. If need-based aid is likely to matter, a 529 is almost always the better vehicle for education savings. Recent changes to the FAFSA formula have largely eliminated the separate problem grandparent-owned 529 plans used to create by counting distributions as student income.

1
Office of the Law Revision Counsel. 26 USC 102 – Gifts and Inheritances
2
Internal Revenue Service. What’s New – Estate and Gift Tax
3
Venmo. Teen Account FAQ for Parents and Guardians
4
Cash App. Teen Banking App and Debit Card for Teens
5
Legal Information Institute. Uniform Gifts to Minors Act (UGMA)
6
Financial Crimes Enforcement Network. Guidance to Encourage Financial Institutions Youth Savings Programs and Address Related Frequently Asked Questions
7
FINRA.org. FINRA Reminds Member Firms of Their Responsibilities for Supervising UTMA and UGMA Accounts
8
Internal Revenue Service. 529 Plans – Questions and Answers
9
Internal Revenue Service. Publication 590-A (2025) – Contributions to Individual Retirement Arrangements (IRAs)
10
Internal Revenue Service. Instructions for Form 709 (2025)
11
Internal Revenue Service. Topic No. 553 – Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax)