Say person A has a bank account with US$20k in it, and then A adds B (not a spouse) to the account, so it's now a joint account. B then withdraws the money and deposits it to his personal account. Would this be considered A's gift to B and reported to IRS?

Would things be different if A and B establish a joint account and then A deposits $20k to the account, and then B transfers the money to his personal account?

  • I don't think the order of events matters. Money deposited into a joint account isn't really a transfer. A's gift to B would likely be the difference between what B deposits to the account and what B withdraws, regardless of when A makes B a joint account holder.
    – chepner
    Aug 30, 2020 at 21:44
  • Yes, you're probably right, @chepner. But still don't know if the scenario I described would be considered gift.
    – Mas
    Aug 31, 2020 at 4:21
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    It would certainly be a gift. B received something from A without giving anything in return. But it's only a gift if B withdraws the money from the account; otherwise, A hasn't relinquished their claim to the money, only made it possible for B to take it. For example, A could withdraw the money again, making it inaccessible to B.
    – chepner
    Aug 31, 2020 at 12:55

1 Answer 1


The order of operations doesn't make a difference. The bank doesn't have a mechanism for reporting the transactions, it is up to the sending party to document the transaction on the appropriate tax forms.

I am assuming that there is not another non-gift reason for the transfer. An example of a non-gift transfer would be to send funds to pay for the joint vacation. I am also assuming that there isn't a cash deposit what would cause the bank to report that part of the transaction.

When close to the annual limit that wouldn't require the amount to be reported, the two methods used to legally avoid the tax issue is to spread the transfer over two years, or if one of the people is married it can be split into two transfers. If both are married, it can be split into 4 transfers.

  • Thanks, @mhoran_psprep. Joint account owners can legally withdraw money from the joint account any way they like, so I wonder how IRS can distinguish gift from non-gift. Say in the beginning A deposits $20k to the account and B uses it, and sometime later B deposits $20K to the account and A uses it. Does it mean both A and B sent gift to the other, and both needed to report the gift? The point of having a joint account is whoever has the money can deposit it to the account, and whoever needs the money can use it. If every transaction is a gift, what's the point of having a joint account?
    – Mas
    Sep 1, 2020 at 1:23
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    The point of a joint account is to allow two parties equal access to the money, not to establish the owner of the money for tax purposes.
    – chepner
    Sep 30, 2020 at 21:03

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