If 2 Unmarried Persons Share a Joint Account, is it a "Gift' if one Person Deposits Money and the Other Person

Question

... uses or withdraws the money?

I assume this often pops up where an elderly and an adult child share a bank account. The elderly parent, assuming they are in a solid financial situation, may decide to allow the child to use funds from the account.

Would the withdrawals be viewed as a "gift" by the IRS for tax purposes?

Answer 1

This is covered in the instructions of the gift tax form 709.

Person A puts in all of the money.
Person B writes checks.

If the money is spent by person B on themselves, then it *is* a gift and subject to the gift tax rules. (If A gives B more than $12,000 a year, A must file the form 709.)

If the money is spent by person B on person A (eg, B writes the checks for A's utility bills or medical expenses), then it is not a gift. If A dies and B takes over ownership of the account due to the way it's titled, because A died, this is an inheritance and not taxable to B.

Answer 2

It could be, depending upon the circumstances. Attempting to use a joint account to skirt the Gift Tax rules won't amuse the IRS nor get you off of the hook for any Gift Taxes due.

Answer 3

no, it is mutual understanding