I was reading the post on ‘custodial’ accounts and the tax implications of that.
When my mother’s doctor told me it was time to take control of her finances, her bank told me the best way to do this was to make me a joint holder of the account.
I manage the account on behalf of my mother and do not gain any benefit from it. Are there tax implications for me? I reported the account on her tax return.
Legal advice is best handled in IMHO.
Colibri
General Questions Moderator
My father is a joint holder of my account at our credit union, and I am joint holder of my brother’s at the same credit union. Never once has this had any impact on mine or their credit or taxes.
One time my brother over-drafted and they took the extra money out of my account. That was…interesting! But in 30 years that’s the only time our finances or names have mingled because of the accounts.
The interest will be reported to the IRS based on the Social Security number that the bank has, so make sure it’s your mother’s. There are forms you can fill out to transfer half (or perhaps all) the income on a joint account, but why put yourself to that bother.
If she put in all the money and if you take out more than $13,000 in one year there might be gift tax implications, but that doesn’t seem likely for what you said.
Another interesting joint account issue -
Many parents, later in life, will put one of their children as a joint holder on their bank accounts to help in facilitating transactions etc., especially if they take ill and aren’t able to handle their own finances.
If the parent then dies, the balance of the accounts revert to the joint holder. They do not become part of the estate of the deceased.
This situation recently happened in my in-laws family, where one daughter, of five children was listed as a joint holder on their mother’s bank accounts. The mother’s will split the entire estate among the five children. However, 2/3 of the mother’s assets were in cash in the bank accounts, which all legally transferred to the one daughter, who refused to share the cash with the estate and her 4 siblings.
Thanks for the tips on my joint holder issue. I heard back from my tax preparer and you were right: I don’t have to report it. 