Joint bank account upon death

[eyeballjames]

Hi, my mother recently passed in 2019 and the money in our joint savings account passed to me.   My mother put in all the money and my name was added to help her manage her bills and with the intention avoided probate. The amount was over 15,000 annual gift exclusion amount. How should I treat this money after her death? I was told no need to report on my personal tax return but want to confirm if my father, whom needs to file their last joint tax return, needs to file any gift or estate returns using form 709 or 706. 

Will someone please point me in the right direction?  Thank you. 

[AlexanderS08]

Yes, there is no tax or reporting consequences for recipients of gifts.

You are also correct that she may need to file a gift tax return. It sounds like it was a gift from your mother and not your father so the money was never his to have to report as a gift. 

If your mother does file a gift tax return, just know that there is probably no tax due, unless there was many millions gifted to you in the account.

[Updated 2/21/2020 | 2:35 PST]

[eyeballjames]

Hi Alexander,

Thank you for the reply. 
Since my mother left behind only cash in her bank and they were all in joint accounts with me and my siblings, no estate executor is needed. My father will be the one to file any gift tax returns on my mother’s behalf.   I guess what I’m asking is that since the money in the joint account was later passed to us and not gifted while she was alive, could my father use the 709 gift tax return form to file in my mother’s behalf?  

[Anonymous_]

I am not certain if there is some sort of misconception here but, for what it is worth, only individuals file gift tax returns; entities, such as estates, do not file gift tax returns (Form 709).

Further, if you inherit cash or property through a will or intestacy, or it passes to you by operation of law upon death of another (e.g., joint tenancy), then no gift tax return is required to be filed. 

[AlexanderS08]

You are correct there is no executor needed. I just simply meant that you could file a gift tax return with her name on it and then mark her as deceased. In other words it was a gift in the year of death.

At the end of the day, there is no tax due, so you don't need to stress too much about any of it. Penalties are generally based on the amount of tax due.

[aadro2]

I would like to post a followup to this old thread as I am still confused:

1. If the mother added the child to her bank account a few years ago, in what year should she have filed a gift tax return?

2. It is said repeatedly in the answers above that no gift tax is ultimately likely due.  While that may be true, a technical explanation of how that happens would be useful.  I share the original poster's confusion that gifts are taxable if made to a person above $18,000 ($15,000 when OP posted the question?), so how exactly is it that no gift tax is owed by anybody?  [I am not disbelieving the answer, just trying to understand the technical reasoning, as I have a similar situation and chanced upon this post while looking for an answer.]

[SusanY1]

For your first question, the gift tax return would have been due in the year of the gift - so the year the individual was added to an account where the interest exceeded the allowed gift for that tax year.  

For the rest, it gets a little more complicated. 

There are two things going on when we talk about "taxable gifts".  One type triggers the filing of the gift tax return.  This is gifts that exceed the annual gift tax exclusion.  

Those would be gifts in excess of the annual gift tax exclusion amount in a given year ($18,000 in 2024 ) or gifts that would exceed this it, except for an election being made to "split" the gift.  (Say, if I give my child $20,000 but my spouse agrees to "split" that with me, so we have to file the return to make that election.) 

This gift allowance is per person receiving the gifts, with some exceptions such as payments made directly for medical bills or certain tuition.  This means I can give as many gifts of $18,000 per person this year that I want, without triggering the need to file.  

Anything under this amount triggers no tax and no filing requirements. 

Anything over this amount triggers the requirement to file the gift tax return.  The return sorts out for us if there is any tax due.  For most taxpayers, there isn't.  And for those where it is, they almost always have a professional sorting this sort of thing out for them (or a team of them, more likely.) 

Filing the return when there area taxable gifts applies the gift to one's lifetime unified credit.  This amount, under current law, is $13.6 million per individual.  

So, no gift tax is due assuming that the individual hasn't already given more than this, in aggregate, when counting taxable gifts (those over the exclusion that don't meet some other exception).

The gift tax return keeps track of these taxable gifts, but no tax is due until the allotted lifetime total is exceeded.  This is why many folks will say "no tax will be due" - but it does assume that the person giving the gift hasn't already give in excess of their unified credit over their lifetime.   


@aadro2 

[aadro2]

Thanks @SusanY1 .  That clears it up.

Couldn't figure out how to mark yours as Best Answer above, but that's what it was.