Mom adds me as a coowner to her savings account. Does the IRS see this as income to me?

Question

I don't mean the interest - I'm worried about the principle. I want to know if by being named a co-owner, would the IRS expect me to declare any part of the savings balance as income, perhaps as a gift to me? I am not withdrawing any money at all.

Answer 1

Money sitting in a savings account is not income. The money in your mother's account is not income, either to your mother or to you. I am assuming the money was put in the account by your mother.

If you withdraw money from this account for your personal use, not for example to pay your mother's expenses, then it is considered a gift to you. No taxes are paid by you for a gift, and you would not report this on your income tax return.

Only if you withdrew more than $12,000 in one year would your mother be required to file a gift tax return. She would owe gift tax once her lifetime gifts exceeded $1 million.

You are not concerned about the interest, as you may know that the interest income will be reported to the IRS using only your mother's SSN and will not be income to you.

Answer 2

Only the interest is taxable, to both of you. However adding you to the account may trigger a gift event depending upon the account balance at the time. Your mother would be liable for any Gift Tax, not you. It would have to have a HUGE balance for any Gift Tax to be due, however.

Answer 3

No, you won't be taxed on the amount in the account.