My fiancé and I just relocated and are looking into a joint
banking account since we would have set one up next year at this time after we
are married....we pay bills together, live together, and are financially
compatible spending wise so I do not want nor do I need any lectures about how
joint banking accounts are the devil and he will drain me for all I'm worth
because we are not married, I think those are silly since its just as easy for
someone who is married to do things like that as opposed to engaged....so
onward and upward into my questions...
We are debating on a joint checking account (each of us will
retain our separate savings accounts and other accounts which we contribute
into monthly)....however my fiancés dad has him convinced that if we join bank
accounts even though we will file separately that we will have to "pay through the nose" on taxes and on our tax
returns simply because of one shared account...and I want to know if there is
any truth to this, I understand it could cause a small bump and I will pay more
anyway since I just took a higher paying job. I should note the only reason my
fiancé is considering not doing this is because he is now under the impression
that we wont be able to afford to pay into taxes every year because of the
joint account. I should also mention that my future father in law is not a tax
professional he is a farmer who most of the time has no clue what he is talking
about when it comes to these matters and is often rather gullible to what
people tell him.
Thanks anyone who made it through this if you don't want to read it...here is a synopsis-If not married filing taxes separately does having 1 joint
account (checking) cause an increase in taxes, and if so is it significant?
Answer :
In general, any couples and individuals use joint bank
accounts as convenient tools for ordinary banking needs, adding to cash savings
or earning interest on bank investment products or etc. A joint bank account is
a financial account that is owned by two or more people. All account holders'
names are listed on a joint bank account, with one person signing an IRS W9
form for tax purposes. The person who signs the W9 tax form when the bank
account was opened owes the income tax on the interest in a joint account. This
is usually the first person listed on the account.However, the IRS views each
individual on a joint account as a co-owner with equal rights of ownership.
Regardless of the relationship between the two individuals, each owner bears an
equal amount of responsibility in reporting and paying taxes.The IRS regards
any interest, or gains earned on cash or other assets held in a joint bank
account as taxable income. Legally, each of you is responsible for paying taxes
on half of the earned interest or gains. Common sources of taxable interest in
a joint account are funds from interest earned on cash, CD,, bonds and money
market accounts. Joint account owners receive a form 1099-INT from their bank
in early spring outlining earned taxable interest above $10 from the previous
calendar year. For unmarried individuals filing separate returns, a joint bank
account can unknowingly trigger a number of potential federal tax
complications. For example, the federal gift tax allows individuals to exclude
the first $14K for 2013, I guess, of total personal gifts from taxation. Any
gifts to individuals or charities outside the exclusion limits are considered
taxable gifts by the IRS. Under these guidelines, withdrawals made from the
joint bank account past the $14K limit would qualify as a taxable gift from the
other owner of the account.
Visit Asktaxguru for Online tax help
No comments:
Post a Comment