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Old 09-11-2014, 02:34 AM
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Gift tax issues on joint bank account ?

Six months ago, the bank told my sister it would be convenient to add her to our mother's account, so we did. Now we realize that this may trigger gift tax issues. The situation:

Mom finally sold her house last month, and would like to gift $75k to my sister and $75k to me. This is great, and we certainly plan to report these gifts (mom's assets will never approach the lifetime exclusion).

But -- is it OK to transfer the funds from her investment account (no check-writing capability) to the joint bank account, and then write the two checks ? Or does loading the funds to the joint account, then writing checks present the risk of some tax issue, complications, or challenges of my sister being self-serving ? (my sister & I are the only children)

Sorry for the detail, I'm just trying to be clear. A couple of forum posts seem to indicate that gift tax is only triggered on withdrawal of funds, not on deposit -- but we want to avoid any confusion or complications. Sometimes, things that are perfectly legal are worth avoiding just because they raise IRS red flags and set-off inquiries ...

THANK YOU !



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Old 09-12-2014, 07:26 AM
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Originally Posted by jshtaxqs View Post
Six months ago, the bank told my sister it would be convenient to add her to our mother's account, so we did. Now we realize that this may trigger gift tax issues. The situation:

Mom finally sold her house last month, and would like to gift $75k to my sister and $75k to me. This is great, and we certainly plan to report these gifts (mom's assets will never approach the lifetime exclusion).

But -- is it OK to transfer the funds from her investment account (no check-writing capability) to the joint bank account, and then write the two checks ? Or does loading the funds to the joint account, then writing checks present the risk of some tax issue, complications, or challenges of my sister being self-serving ? (my sister & I are the only children)

Sorry for the detail, I'm just trying to be clear. A couple of forum posts seem to indicate that gift tax is only triggered on withdrawal of funds, not on deposit -- but we want to avoid any confusion or complications. Sometimes, things that are perfectly legal are worth avoiding just because they raise IRS red flags and set-off inquiries ...

THANK YOU !
Mom finally sold her house last month, and would like to gift $75k to my sister and $75k to me. This is great, and we certainly plan to report these gifts (mom's assets will never approach the lifetime exclusion). ===> No you do not need to report those gifts; your mother needs to file form 709 as the gifs exceeds $28K($14K+$14K or $56K($28K+$28K if your mother takes gift splitting with your father)) the donor is generally responsible for paying the gift tax. Under special arrangements you, the donees, want to/ may agree to pay the tax instead(under net gift situation). If the donor does not pay the tax, the IRS may collect it from you.Gift tax is not an issue for most people; Currently, a taxpayer does not pay gift tax until they have given away over $5.45 million in their lifetime.

As ONE of them gives a check for $28001 or more, then they BOTH would need to file forms because BOTH of them would be nibbling into the $5.45Million lifetime gift exclusion.

As they are married, your parents can give $14,000 each to each of you. This means they give a maximum of $28,000 per person per year, or $56,000 without filong form 709.

If your mother is single, she will need to fill out form 709s showing the amount of each gift over $14,000 per child per year. she may give, if single, a total of $28,000. she would have to report the other $122,000 as a gift. But, in any event neither your mother or you would have to pay any gift tax

But -- is it OK to transfer the funds from her investment account (no check-writing capability) to the joint bank account, and then write the two checks ? ====>I think so; No matter two checks, for you and your spouse, as the funds, as gifts, are transferred to yur joint account as the total gifts of $150K .

Or does loading the funds to the joint account, then writing checks present the risk of some tax issue, complications, or challenges of my sister being self-serving ? (my sister & I are the only children)===========as mentioned above; no tax issue for her(except she needs to file form 709)

Sorry for the detail, I'm just trying to be clear. A couple of forum posts seem to indicate that gift tax is only triggered on withdrawal of funds, not on deposit -- but we want to avoid any confusion or complications. Sometimes, things that are perfectly legal are worth avoiding just because they raise IRS red flags and set-off inquiries ...=======you as recipients need to pay tax only on interest earned on the gifts;



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