If I have a joint bank account with my mother, does money I take out of it count as a taxable gift?
On top of that, can I take money out of a bank account with joint ownership without it counting as another taxable gift?
Answers:
I depends...who is claiming the interest on taxes? Who made the deposits? Believe it or not, a lot of people try to scam the IRS, Social Security and Medicaid by putting their children's names on bank accounts. (should I be pointing at you). They are all aware of this, so these kinds of accounts are noted. Large withdrawals and deposits are often reported under the patriot act. If you are trying to get around the tax laws or make other shady dodges, eventually you will probably be caught. Paying principle, interest and penalties isn't fun.
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By "child" I meant child of your mother. As our parents age, there are tactics to get more medicaid coverage without spending savings.or to avoid gift taxes...one of those tactics is to put a "child" (they can be a 50 year old child...it doesn't matter) on the account as a co-signatory. The government has become aware of this stuff and looks for it. I know because my father (age 66) got caught doing that with his mother.
If you are BOTH contributing to the account and the money could conceivably be yours...then you have nothing to worry about.IF however, the government can prove that deposits are solely your mother's, they may come after you for that tax money.
If the account is in both your names it's not a gift at all. It is your money jointly. Hence, the "joint" account.
If I understand correctly, you're wanting to withdraw a large amount from your bank account, and just want to make sure it won't count as a taxable transaction. If you're taking the money out for something, say a down payment on a car or house, you won't get into any trouble. It's your account, your money (assuming it IS your money and not your mother's), and as you said taxes have already been paid on it.
There is the interest income to think about, but the bank will issue a 1099-INT to the correct person, so there's nothing to worry about there.
Just make sure that whatever you do with the money is documented. In the random event that your tax return gets selected for audit (don't worry I'm not saying it'll happen, but just in case), and the IRS sees a huge withdrawal, they'll want to know where the money went, so just make sure to keep receipts.
In the event you're planning on giving the money to somone else, or the income is in fact your mother's, you'll want to check with a local preparer to go over the tax implications of that transaction with you.
Hope this helps!
If all deposits made to the account came from your mother then withdrawals by you are gifts subject to the 12,000 exclusion. For joint accounts gifts are considered made when withdrawn by the party not contributing to the deposits.
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