Does it matter that I just transferred a gift of $23,000 to our son from an account that is not jointly owned with my husband even though we file jointly?

[km2]

I forgot that the account was not a joint account until after I had done it.  If it needs to be given from a joint account, could I transfer it back to my account and then make the gift from a joint account?

[rjs · Accepted solution]

Making the gift from a joint account does not make it two separate gifts from you and your husband. A gift can only have one donor. If you gave the money to your son, you made the gift all by yourself, even if you took the money from a joint account.

There are a couple of things you can do now.

You can file a gift tax return, Form 709, to designate all gifts that you make this year as split between you and your husband. Read very carefully the entire section about split gifts in the IRS instructions for Form 709, including the section on when the other spouse must also file a gift tax return.

Or, instead of splitting your gifts, you can just file a gift tax return by yourself, reporting the gift as having been made only by you. You will not have to pay any gift tax, even though the gift was over $15,000, unless you have already made total lifetime gifts of more than $11 million, but you have to file the return. This will reduce your lifetime gift and estate tax exclusion by the full amount of the gift, but, depending on your financial situation, that might not be a concern, since the lifetime exclusion is over $11 million.

For either of these alternatives, you might want to consult a local tax professional who has experience with gift tax. As SweetieJean said, you cannot use TurboTax to file a gift tax return. TurboTax is only for income tax.

I'm not sure that transferring the money back to your own account or a joint account would legally "undo" the gift. It might be considered a gift from your son to you, which would add another layer of complications. If it was done with the understanding that you would return it to him, which seems to be the case, that would present even more legal complications. You should definitely consult a tax professional or a tax lawyer before you do any more transferring of money.

In the future, if you and your husband want to make a gift that exceeds the annual exclusion ($15,000 for 2019), but is less than twice that amount, you should each make a separate gift of half the total. You can each write and sign a separate check, or each make a separate transfer from any account, joint or separate, that each of you individually has access to.

[km2]

Thanks so much. “A gift can only have one owner” was most valuable. I also appreciate that I could just make thing worse. I forgot to add that my name is also on the account, although he is the one using it daily. The account was opened when he was a teenager. Does this info change your thoughts. Want to do the correct thing. Just want to think completely through so I will stop worrying about it (OCD!).

[rjs]

If you are a co-owner of the account that you transferred the money into, that muddies the situation even more. You really need to consult a tax professional who has in-depth knowledge of the rules for gifts.

[SweetieJean]

TT does not support Gift taxes. This is an income tax forum.

[Spino]

It doesn't have to be that hard :-). If you are married and the two of you want to each give a gift to your son without filing a gift tax return (greater than the single gift limit but under the double limit,) just write your son a note that you are each giving him part of the money and both sign it and keep a copy in your records. It can even be an email chain that you save or print out.

Not only will this satisfy the IRS, but they will never audit you about this anyway. It's far from the top of their figuratively piled high desk :-).