Gift Tax and Splitting with Spouse

[New York Enrolled Agent]

I don't know how adding son[brother as amended by RuthC] to savings account would be treated. Probably, a gift of half the account, maybe all the account since he would have access to it all. Someone else will jump in and explain why that's a bad idea.

Lion - to answer your question - the addition of the name does not create a gift - the gift is determined when the brother would access the money for his benefit.

Here is a snip from Reg. §25.2511-1

(4) If A creates a joint bank account for himself and B (or a similar type of ownership by which A can regain the entire fund without B's consent), there is a gift to B when B draws upon the account for his own benefit, to the extent of the amount drawn without any obligation to account for a part of the proceeds to A. Similarly, if A purchases a United States savings bond registered as payable to "A or B," there is a gift to B when B surrenders the bond for cash without any obligation to account for a part of the proceeds to A.

[ruthc]

For “Gift Splitting” see The Tax Book 21-3; 21-28

Unfortunately, I don't have that section in my TaxBook. I have the 1040 Edition Plus. I did read the section on splitting in the IRS Pub for gifts.

Lion, she is not adding her son to the savings account. It is her brother.

[TAXNJ]

For “Gift Splitting” see The Tax Book 21-3; 21-28

[Lion]

If they are more than the exclusion for ONE spouse. If the two spouses choose to split, then they report by filing gift tax returns. (If the gift is less than the exclusion, then no return required and splitting is unneccesary.)

If gifts are more than the exclusion for one spouse, your client must file a gift tax return or client and spouse file to split gifts.

And, remember that it is ALL types of gifts to one person during one tax year.

[TAXNJ]

[QUOTE=Lion;n298781]In order to split, you have to file a gift tax return for each spouse to report that they are splitting......


Do you mean if gifts are more than the annual gift tax exclusion?

[Lion]

In order to split, you have to file a gift tax return for each spouse to report that they are splitting.

Also, the $15,000 exclusion is for everything to one person in that calendar year: this cash gift, birthday gifts, holiday gifts, help with rent, whatever you client gave her son during the year.

I don't know how adding son to savings account would be treated. Probably, a gift of half the account, maybe all the account since he would have access to it all. Someone else will jump in and explain why that's a bad idea.

[ruthc]

A client has inherited some money. She wants to give $100K to her brother this year. She plans on having his name put on her savings account and just have him take out the $100K out of her account. I mentioned the gift tax return to her along with the max of $15K/yr. I would like to ask if I am missing something after reading the gift tax pub. She is married and so is her brother. Even if she splits the gift giving with her husband for 2019 it will exceed the $15K max. and the gift tax return is required. But if she wanted to..... could she and her spouse gift $15K each to her brother and the same amount to his spouse in 2019 (total $60K). Then gift $10K each in January 2020 to her brother and his spouse ($40K). She would then not have to file any gift return. I am not sure if she and spouse still would be required to do a gift return because she is splitting the gift giving with her spouse. Thanks in advance.........