tax on joint accounts

JackHammer · 03-02-2004, 10:03 AM

Just say that my friend has a joint account with his pops. His pops decided to transfer $50k into the account so junior here can use that as a down payment for a house. Will junior be taxed?

ray · 03-02-2004, 10:10 AM

This would qualify as a Gift and would be taxed as such:

http://www.ctj.org/html/estate.htm

Chgoman · 03-02-2004, 10:17 AM

If you want to do everything above board, you either have to consider it a loan or a gift. As a loan it would not be taxable, but you'll have a harder time qualifying for a mortgage as they don't like to see big personal loans. As a gift, you won't have a problem with the mortgage, but you will have issues with gifting taxes.

Although this isn't 100% above board, what most people do is call it a gift when taking a mortgage out so that there is no issue with the mortgage. Most likely that's the last you'll ever hear of it. If the IRS ever got wind of it and asked about it, you can draft up paperwork to show that it is a forgivable loan (can't call it this to the bank as they don't like this either), with 10K (or 20K if both of your parents are together as each can give you 10K), forgiven each year. This keeps you under gifting rules.

JackHammer · 03-02-2004, 03:24 PM

OK so he's been depositing his monthly salary into this account. How would anyone know what belongs to who? If he takes out say $30k from the joint account, how could that be taxed?

Kevster · 03-02-2004, 03:35 PM

There are other ways around this - Pops could give Junior $10k per year without being taxed. Mom could also give Junior $10k per year witout being taxed. If Junior is married, Pops and Mom could each give Mrs. Junior $10k without being taxed. You can get $40k per year in monetary gifts from direct family members without falling into the gift tax trap. If there is a sibling, you can add another $20k to that too.

JackHammer · 03-02-2004, 03:39 PM

So, mom and dad could give junior $20k and then pops could give junior's sis $10k and then junior's sis can give him that $10k as a gift? Man loopholes everywhere.

Oh by the way, I thought it was $11k and not $10k.

03-02-2004, 10:03 AM	#1
JackHammer Commander Join Date: Jun 2000 Location: The Toilet Capital of America Posts: 1,308	tax on joint accounts Just say that my friend has a joint account with his pops. His pops decided to transfer $50k into the account so junior here can use that as a down payment for a house. Will junior be taxed? __________________ "I'm very sorry for your loss. Your mother was a terribly attractive woman." -Royal Tenebaum "Oh yeah. Oh yeah. I would do everything to her, I don't care what she looks like. I would wreck that chick." -Brian from the Family Guy after Peter asked him whether he would have sex with Lois.

03-02-2004, 10:10 AM	#2
ray lilbigblue Join Date: Jan 2003 Posts: 6,613	This would qualify as a Gift and would be taxed as such: http://www.ctj.org/html/estate.htm __________________ new uploader My World

03-02-2004, 03:35 PM	#5
Kevster Admiral Join Date: Jan 2002 Location: NorCal Posts: 6,027	There are other ways around this - Pops could give Junior $10k per year without being taxed. Mom could also give Junior $10k per year witout being taxed. If Junior is married, Pops and Mom could each give Mrs. Junior $10k without being taxed. You can get $40k per year in monetary gifts from direct family members without falling into the gift tax trap. If there is a sibling, you can add another $20k to that too. __________________ I think over again My small adventures, my fears. The small ones that seemed so big, For all the vital things I had to get and to reach. And yet there is only one great thing, the only thing: To live to see the great day that dawns, And the light that fills the world. -old Inuit song

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03-02-2004, 10:17 AM	#3
Chgoman Lieutenant Commander Join Date: Apr 2002 Location: Mission Viejo, CA Posts: 564	If you want to do everything above board, you either have to consider it a loan or a gift. As a loan it would not be taxable, but you'll have a harder time qualifying for a mortgage as they don't like to see big personal loans. As a gift, you won't have a problem with the mortgage, but you will have issues with gifting taxes. Although this isn't 100% above board, what most people do is call it a gift when taking a mortgage out so that there is no issue with the mortgage. Most likely that's the last you'll ever hear of it. If the IRS ever got wind of it and asked about it, you can draft up paperwork to show that it is a forgivable loan (can't call it this to the bank as they don't like this either), with 10K (or 20K if both of your parents are together as each can give you 10K), forgiven each year. This keeps you under gifting rules.

03-02-2004, 03:24 PM	#4
JackHammer Commander Join Date: Jun 2000 Location: The Toilet Capital of America Posts: 1,308	OK so he's been depositing his monthly salary into this account. How would anyone know what belongs to who? If he takes out say $30k from the joint account, how could that be taxed?

03-02-2004, 03:39 PM	#6
JackHammer Commander Join Date: Jun 2000 Location: The Toilet Capital of America Posts: 1,308	So, mom and dad could give junior $20k and then pops could give junior's sis $10k and then junior's sis can give him that $10k as a gift? Man loopholes everywhere. Oh by the way, I thought it was $11k and not $10k.

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