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4 Answers

Joint Bank Accounts and Gift Tax?

Asked by: megan 2731 views YA Discussion

Here is the situation….

I live in Massachusetts. I have several bank accounts that I have my mother on as the second person (aka joint account). This includes a checking account, a savings account as well as 2 CDs. The total in these accounts is roughly $ 25,000. My mother is not even close to retirement age so there is no death situation there.

I am trying to use this money as a down payment on a house. I read online that I may be hit with a gift tax if I choose to withdraw the money and use it as a down payment to a house that will be owned by me. There is a limit of $ 13,000/year. Apparently with a joint account, half the money could potentially be mine and half could be hers?

What is the best way to approach this situation?

I also read that you may not need to pay a gift tax for the year if you apply it towards the lifetime limit of a few million. You would just need to mark this on the taxes. Does that make any sense?

How others found here:

  • joint account gift tax

4 Answers

  1. Bash Limpbutt's Oozing Cyst© on Oct 23, 2012 Reply

    The donor is responsible for filing gift tax returns and paying any gift taxes. If a question arises of whose funds are being used, the IRS will require you both to provide proof of deposit of personal monies into that account.

    Passing money through a joint account to avoid gift tax filings is illegal and while the amounts that you are dealing with in your situation are not likely to raise any questions it still constitutes tax evasion (even if no tax would be due if the returns were properly filed) and carries no statute of limitations at all.

    On the other hand, if all of the money in the accounts were deposited by you and you can substantiate that if asked, feel free to do whatever you want with that money. If the reason that her name is on the account is to ensure that she has access to the funds should anything happen to you, consider removing her name as a joint owner and adding her name as POD — Payee On Death. That ensures that she has access to funds if anything happens to you but keeps your money and her money separate as they should be.

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  2. R K on Oct 23, 2012 Reply

    if your name is on the account,your taking money out that’s yours, it isn’t a gift.if your name is first on the account and your social is the number being used, its your account, not hers, she is on the account as a joint owner not the primary owner.no one is going to ask you what you spend the money on when you make a withdrawl.

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  3. tro on Oct 23, 2012 Reply

    It would appear that the bank accounts are all yours with your mother as a co signator in case you are unable to sign checks
    unless has contributed to the bank accounts the money is all yours
    and there is no gift tax to the recipient, in the case of large gifts the estate pays any taxes due

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  4. Bobbie on Oct 23, 2012 Reply

    Instructions for Form 706 (08/2011) http://www.irs.gov/instructions/i706/index.html
    This would be instructions for the form when you think that your MOTHER might need to fill it out and file it for this purpose and time in your life.
    13000 this year and 14000 next tax year 2014 for this purpose of the gift tax exclusion amount for this purpose.
    You may want to seek some professional face to face assistance to make sure that you are doing this correctly at this time in your life.
    Hope that you find the above enclosed information useful. 10/22/2012

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