Why I Recommend BRK.B for UTMA Accounts: Avoid Pointless Tax Returns and Filing Costs.

Why I Recommend BRK.B for UTMA Accounts: Avoid Pointless Tax Returns and Filing Costs.

Opening a UTMA account for your child feels like a smart, responsible step toward their financial future.

But here’s the surprise many parents face:

Even modest investment income can drag you into unnecessary IRS paperwork, tax prep fees, and stress.

For 2025, if your child’s unearned income (like dividends, interest, or capital gains) exceeds just $1,300 for the year, the IRS requires a full Form 1040 to be filed in their name.

That means:

Full tax return preparation

Possible Kiddie Tax calculations (where part of their income gets taxed at your top rate if it exceeds $2,600)

Paying a tax preparer hundreds of dollars, or spending your own time learning tax forms, for what’s often just a few hundred dollars of income.

It’s a frustrating reality: Parents end up paying $200–$400 for tax prep when their kid only earned $1,500 in dividends and interest.

All just to stay compliant with IRS filing rules.

The Simple Solution: BRK.B (Berkshire Hathaway Class B Stock)

This is why I often recommend Berkshire Hathaway Class B shares (BRK.B) as the core holding for UTMA accounts.

Here’s why it works:

No dividends = no annual taxable income.

No tax return filing requirement until you actually sell the stock (and trigger a capital gain).

No Kiddie Tax headaches from recurring dividend income.

You can let the investment quietly grow for years without crossing any IRS filing thresholds.

True, BRK.B is not a formal S&P 500 index fund.

But historically, its performance has tracked very closely to the S&P 500, especially since Berkshire owns large stakes in many of the same big companies (Apple, Coca-Cola, American Express, etc.).

For most families, the small difference in returns is more than worth it when you factor in the time, cost, and hassle saved by avoiding yearly child tax returns.

Bottom Line:

If your goal is growth without tax headaches, and you want to avoid paying for a full tax return every time your child earns more than $1,300 in dividend, BRK.B is a smart, tax-efficient, low-maintenance choice for UTMA investing.