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This answer is from i want to open a savings account for my grand daughter and deposit money every month for her future is the interest she earns taxible

Mark Kantrowitz
FiLife Contributor
9 months ago

If it is a regular bank savings account, the interest is taxable.

A better approach is to open a state section 529 college savings plan with you as the account owner and your granddaughter as the beneficiary. The interest earnings is deferred and ultimately tax-free if she uses the money for qualified higher education expenses (e.g., tuition, fees, room and board). Any contributions you make to the plan are removed from your estate.

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