In the U.S. Does a joint income tax return filing create gift?

Question

Income taxpayers are Husband and Wife. Both are residents but not citizens of U.S. Husband earns 450K per year for 30 years which is included on joint return. Wife splits the earnings with husband every year. Was the $225 per year to wife a gift? Non-taxable gifts to spouse is limited because they are non-citizens.

Answer 1

No, because they are married, it's considered marital assets.

Answer 2

It looks like you hit on something. Section 2523 does limit gifts to a non-citizen spouse to $100,000. The income tax rules rest on residency more than citizenship. In a community property state, the income earned is presumed owned by the community, meaning 50/50. In a common law state, that is not necessarily the case and splitting the income earned is possible only because the Code allows for married filing jointly status. All that said, the problem is theoretical at least for now.

Answer 3

No the United States presumes that spouses fully share all assets and income. In some states, the property is indivisible and in divorce acts of one partner, even with the ignorance of the other partner, are fully binding acts of the other as though they had personally committed the act (the community property states).

Only in specific circumstances can this create an issue. In some states, in the specific case where spouses maintain their own assets from prior to marriage, a gifting could occur. This however has no tax consequence generally at the Federal level.

For US income tax purposes a husband and wife are a single entity with rare exceptions such as the "injured spouse" law recently enacted.

Answer 4

Not if they are filing a joint return using filing status MFJ.