I am a US citizen. My wife is a permanent resident. We moved to the US roughly 15 years ago and established a joint bank account. We funded the account with shared funds. We have both deposited money into the joint account over many years, but I
deposited more than my spouse - for the example let's say 2/3 to 1/3.

We also purchased and then sold a house in California.

For the example, let's say the down payment on the house was $300k and the value of the house was $1M. 2/3 of the down payment was from the joint account and 1/3 was from my private account.

1. Would my deposits into the joint account be considered a gift to my spouse? 2. Would the funding of the house purchase be considered a gift to my spouse? 3. Finally, when we sold the house for a profit would any of the gain be considered a gift to my spouse?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

motomachita <motomachita@gmail.com> wrote:

I am a US citizen. My wife is a permanent resident. We moved to
the US roughly 15 years ago and established a joint bank account.
We funded the account with shared funds. We have both deposited
money into the joint account over many years, but I deposited more
than my spouse - for the example let's say 2/3 to 1/3.

We also purchased and then sold a house in California.

For the example, let's say the down payment on the house was $300k
and the value of the house was $1M. 2/3 of the down payment was
from the joint account and 1/3 was from my private account.

Your situation is much more complicated than you believe. You left
out vital information that is required before reasonable answers can
be given to your questions.

1. Would my deposits into the joint account be considered a gift
to my spouse?

What state do you live in? Is it a joint account or a tenants in
common account? Did you intend it to be a gift?

2. Would the funding of the house purchase be
considered a gift to my spouse?

How did you take title?

3. Finally, when we sold the house
for a profit would any of the gain be considered a gift to my
spouse?

Again, that depends on how you held title while you owned the house,
and how the bank account is set up that the money goes into. Finally
it depends on if your wife's equal ownership in the house (if she had
equal ownership) was already considered a gift.

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On Sunday, May 8, 2022 at 5:35:43 PM UTC-7, Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

I am a US citizen. My wife is a permanent resident. We moved to
the US roughly 15 years ago and established a joint bank account.
We funded the account with shared funds. We have both deposited
money into the joint account over many years, but I deposited more
than my spouse - for the example let's say 2/3 to 1/3.

We also purchased and then sold a house in California.

For the example, let's say the down payment on the house was $300k
and the value of the house was $1M. 2/3 of the down payment was
from the joint account and 1/3 was from my private account.

Your situation is much more complicated than you believe. You left
out vital information that is required before reasonable answers can
be given to your questions.

1. Would my deposits into the joint account be considered a gift
to my spouse?

What state do you live in? Is it a joint account or a tenants in
common account? Did you intend it to be a gift?

California. Joint account. It was not intended to be a gift.

2. Would the funding of the house purchase be
considered a gift to my spouse?

How did you take title?

Community Property with the Right of Survivorship

3. Finally, when we sold the house
for a profit would any of the gain be considered a gift to my
spouse?

Again, that depends on how you held title while you owned the house,
and how the bank account is set up that the money goes into. Finally
it depends on if your wife's equal ownership in the house (if she had
equal ownership) was already considered a gift.

Gains went back into the same joint account.
Intent was for my wife to have equal ownership.

--
Stu
http://DownToEarthLawyer.com

Thanks for taking the time. I really appreciate it.

Ken

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

SF FS <kennethalevin@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

I am a US citizen. My wife is a permanent resident. We moved to
the US roughly 15 years ago and established a joint bank
account. We funded the account with shared funds. We have both
deposited money into the joint account over many years, but I
deposited more than my spouse - for the example let's say 2/3
to 1/3.

We also purchased and then sold a house in California.

For the example, let's say the down payment on the house was
$300k and the value of the house was $1M. 2/3 of the down
payment was from the joint account and 1/3 was from my private
account.

Your situation is much more complicated than you believe. You
left out vital information that is required before reasonable
answers can be given to your questions.

1. Would my deposits into the joint account be considered a
gift to my spouse?

What state do you live in? Is it a joint account or a tenants in
common account? Did you intend it to be a gift?

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person inherits
your share due to the joint tenancy, it's considered a gift
(inheritance) at that time.

2. Would the funding of the house purchase be
considered a gift to my spouse?

How did you take title?

Community Property with the Right of Survivorship

Each spouse is considered to own half of communitiy property. So
titling something as community property is considered a gift.

3. Finally, when we sold the house
for a profit would any of the gain be considered a gift to my
spouse?

Again, that depends on how you held title while you owned the
house, and how the bank account is set up that the money goes
into. Finally it depends on if your wife's equal ownership in the
house (if she had equal ownership) was already considered a gift.

Gains went back into the same joint account.
Intent was for my wife to have equal ownership.

If the house was community property, it was a gift at that time, so
it wasn't a gift when the house was sold because your wife already
owned half at that time.

You also said that the account was not considered to be a gift but
now you're saying you considered ownership of the account to be
equal. It can't be both at the same time. If it's a gift, ownership
becomes equal. And if you consider ownership to be equal, even
though contribution wasn't equal, then it becomes a gift at that
time.

--
Stu
http://DownToEarthLawyer.com

Thanks for taking the time. I really appreciate it.

Ken

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On Monday, May 9, 2022 at 7:55:49 AM UTC-7, Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

I am a US citizen. My wife is a permanent resident. We moved to
the US roughly 15 years ago and established a joint bank
account. We funded the account with shared funds. We have both
deposited money into the joint account over many years, but I
deposited more than my spouse - for the example let's say 2/3
to 1/3.

We also purchased and then sold a house in California.

For the example, let's say the down payment on the house was
$300k and the value of the house was $1M. 2/3 of the down
payment was from the joint account and 1/3 was from my private
account.

Your situation is much more complicated than you believe. You
left out vital information that is required before reasonable
answers can be given to your questions.

1. Would my deposits into the joint account be considered a
gift to my spouse?

What state do you live in? Is it a joint account or a tenants in
common account? Did you intend it to be a gift?

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person inherits
your share due to the joint tenancy, it's considered a gift
(inheritance) at that time.

Just to make sure I understand - even in a Community Property state my deposits into a joint account are not a gift at the time of the deposit?
At the time of inheritance my share (because I am in a community property state) would be 50%?

I apologize for my lack of understanding, but starting at the beginning, my intent was for my wife to have an equal share of everything - I just didn't realize that was a gift. If my intent is/was for my wife to have equal ownership, does that mean that
my deposits are gifts at the time of deposit rather than inheritance?

2. Would the funding of the house purchase be
considered a gift to my spouse?

How did you take title?

Community Property with the Right of Survivorship

Each spouse is considered to own half of communitiy property. So
titling something as community property is considered a gift.

3. Finally, when we sold the house
for a profit would any of the gain be considered a gift to my
spouse?

Again, that depends on how you held title while you owned the
house, and how the bank account is set up that the money goes
into. Finally it depends on if your wife's equal ownership in the
house (if she had equal ownership) was already considered a gift.

Gains went back into the same joint account.
Intent was for my wife to have equal ownership.

If the house was community property, it was a gift at that time, so
it wasn't a gift when the house was sold because your wife already
owned half at that time.

At the time of purchase I contributed 2/3 of the down payment. 1/2 of the 2/3 would be the gift?
1/2 of my share was under the exclusion limit of $143k at the time, was I supposed to report this gift? If so, is it ever too late to amend my return (2013)?

You also said that the account was not considered to be a gift but
now you're saying you considered ownership of the account to be
equal. It can't be both at the same time. If it's a gift, ownership
becomes equal. And if you consider ownership to be equal, even
though contribution wasn't equal, then it becomes a gift at that
time.

Again, I really appreciate all of this information. I was always searching for the meaning of a gift, and finally I have found it. The IRS knows it all! I hope that other people married to permanent residents will land on this page and realize these
complexities exist much earlier than I have...

--
Stu
http://DownToEarthLawyer.com

Thanks for taking the time. I really appreciate it.

Ken

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On Monday, May 9, 2022 at 7:55:49 AM UTC-7, Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

I am a US citizen. My wife is a permanent resident. We moved to
the US roughly 15 years ago and established a joint bank
account. We funded the account with shared funds. We have both
deposited money into the joint account over many years, but I
deposited more than my spouse - for the example let's say 2/3
to 1/3.

We also purchased and then sold a house in California.

For the example, let's say the down payment on the house was
$300k and the value of the house was $1M. 2/3 of the down
payment was from the joint account and 1/3 was from my private
account.

Your situation is much more complicated than you believe. You
left out vital information that is required before reasonable
answers can be given to your questions.

1. Would my deposits into the joint account be considered a
gift to my spouse?

What state do you live in? Is it a joint account or a tenants in
common account? Did you intend it to be a gift?

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person inherits
your share due to the joint tenancy, it's considered a gift
(inheritance) at that time.

Just to make sure I understand - even in a Community Property state my deposits into a joint account are not a gift at the time of the deposit? At the time of inheritance would my share (because I am in a community property state) be 50%?

I apologize for my lack of understanding surrounding the gift concept, but starting at the beginning, my intent was for my wife to have an equal share of everything - I just didn't realize this was a gift. If my INTENT is/was for my wife to have equal
ownership of everything from the start does my intent change anything? i.e., would that mean that my deposits are gifts at the time of deposit rather than inheritance and would they need to be reported annually?

2. Would the funding of the house purchase be
considered a gift to my spouse?

How did you take title?

Community Property with the Right of Survivorship

Each spouse is considered to own half of communitiy property. So
titling something as community property is considered a gift.

3. Finally, when we sold the house
for a profit would any of the gain be considered a gift to my
spouse?

Again, that depends on how you held title while you owned the
house, and how the bank account is set up that the money goes
into. Finally it depends on if your wife's equal ownership in the
house (if she had equal ownership) was already considered a gift.

Gains went back into the same joint account.
Intent was for my wife to have equal ownership.

If the house was community property, it was a gift at that time, so
it wasn't a gift when the house was sold because your wife already
owned half at that time.

At the time of purchase we used the joint account to fund the down payment. I am now thinking that 1/2 of the down payment was a gift to my spouse. If 1/2 of my share was under the exclusion limit of $143k at the time, was I supposed to report this
gift? If so, is it ever too late to amend my return (2013)?

You also said that the account was not considered to be a gift but
now you're saying you considered ownership of the account to be
equal. It can't be both at the same time. If it's a gift, ownership
becomes equal. And if you consider ownership to be equal, even
though contribution wasn't equal, then it becomes a gift at that
time.

Again, I really appreciate all of this information. I was always searching for the meaning of a gift, and finally I have found it. The IRS knows it all! I hope that other people married to permanent residents will land on this page and realize these
complexities exist much earlier than I have...

--
Stu
http://DownToEarthLawyer.com

Thanks for taking the time. I really appreciate it.

Ken

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

motomachita <motomachita@gmail.com> wrote:

Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person
inherits your share due to the joint tenancy, it's considered a
gift (inheritance) at that time.

Just to make sure I understand - even in a Community Property
state my deposits into a joint account are not a gift at the time
of the deposit? At the time of inheritance my share (because I am
in a community property state) would be 50%?

It's much more complicated than that. But in general if you and your
wife put unequally put separate property money into a "joint" bank
account (so not tenants in common and not community property) it's
not considered a gift at that time.

I apologize for my lack of understanding, but starting at the
beginning, my intent was for my wife to have an equal share of
everything - I just didn't realize that was a gift. If my intent
is/was for my wife to have equal ownership, does that mean that my
deposits are gifts at the time of deposit rather than inheritance?

If you want your wife to be an equal owner of property that is not
community property, then to the extent she didn't contribute half,
that is a gift.

If the house was community property, it was a gift at that time,
so it wasn't a gift when the house was sold because your wife
already owned half at that time.

At the time of purchase I contributed 2/3 of the down payment.
1/2 of the 2/3 would be the gift? 1/2 of my share was under the
exclusion limit of $143k at the time, was I supposed to report
this gift? If so, is it ever too late to amend my return (2013)?

Not half the 2/3 would be a gift but one-quarter of the 2/3 (or 1/6)
would be a gift - that's what it would take to make you both half
owners. And the annual exemption changes with inflation, so for 2022
it's $164,000.

Again, I really appreciate all of this information. I was always
searching for the meaning of a gift, and finally I have found it.
The IRS knows it all! I hope that other people married to
permanent residents will land on this page and realize these
complexities exist much earlier than I have...

There are a couple of other things you might want to know about. If
you want to make gifts of more than the annual exemption, you can do
part of it as a sale, and then forgive some in following years.

One really serious situation can occur when a non-citizen owns real
estate, especially subject to a mortgage. There is very little
estate tax exemption when that person dies. And under some
circumstances there may not be a deduction for the mortgage. I've
seen the IRS ask for more in estate tax on a property than the
decedent's equity.

One way to deal with that is to have a foreign corporation own the
property. Stock in a foreign corporation is not considered a US
asset, even if it owns property in the US. So it is not subject to
estate tax in the US. But it could be subject to estate tax in the
country where the corporation is set up. So be careful if that might
be an issue.

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On Tuesday, May 10, 2022 at 12:00:54 AM UTC-4, Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person
inherits your share due to the joint tenancy, it's considered a
gift (inheritance) at that time.

Just to make sure I understand - even in a Community Property
state my deposits into a joint account are not a gift at the time
of the deposit? At the time of inheritance my share (because I am
in a community property state) would be 50%?

It's much more complicated than that. But in general if you and your
wife put unequally put separate property money into a "joint" bank
account (so not tenants in common and not community property) it's
not considered a gift at that time.

I apologize for my lack of understanding, but starting at the
beginning, my intent was for my wife to have an equal share of
everything - I just didn't realize that was a gift. If my intent
is/was for my wife to have equal ownership, does that mean that my
deposits are gifts at the time of deposit rather than inheritance?

If you want your wife to be an equal owner of property that is not
community property, then to the extent she didn't contribute half,
that is a gift.

If the house was community property, it was a gift at that time,
so it wasn't a gift when the house was sold because your wife
already owned half at that time.

At the time of purchase I contributed 2/3 of the down payment.
1/2 of the 2/3 would be the gift? 1/2 of my share was under the
exclusion limit of $143k at the time, was I supposed to report
this gift? If so, is it ever too late to amend my return (2013)?

Not half the 2/3 would be a gift but one-quarter of the 2/3 (or 1/6)
would be a gift - that's what it would take to make you both half
owners. And the annual exemption changes with inflation, so for 2022
it's $164,000.

Again, I really appreciate all of this information. I was always
searching for the meaning of a gift, and finally I have found it.
The IRS knows it all! I hope that other people married to
permanent residents will land on this page and realize these
complexities exist much earlier than I have...

There are a couple of other things you might want to know about. If
you want to make gifts of more than the annual exemption, you can do
part of it as a sale, and then forgive some in following years.

One really serious situation can occur when a non-citizen owns real
estate, especially subject to a mortgage. There is very little
estate tax exemption when that person dies. And under some
circumstances there may not be a deduction for the mortgage. I've
seen the IRS ask for more in estate tax on a property than the
decedent's equity.

One way to deal with that is to have a foreign corporation own the
property. Stock in a foreign corporation is not considered a US
asset, even if it owns property in the US. So it is not subject to
estate tax in the US. But it could be subject to estate tax in the
country where the corporation is set up. So be careful if that might
be an issue.
--
Stu
http://DownToEarthLawyer.com

--

Much of this is moot since the original post stated that the spouse was a permanent resident of the US. "Green card" holders are subject to the same tax rules as citizens.

Ira Smilovitz, EA
Leonia, NJ

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On Tuesday, May 10, 2022 at 7:05:58 AM UTC-7, ira.sm...@gmail.com wrote:

On Tuesday, May 10, 2022 at 12:00:54 AM UTC-4, Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person
inherits your share due to the joint tenancy, it's considered a
gift (inheritance) at that time.

Just to make sure I understand - even in a Community Property
state my deposits into a joint account are not a gift at the time
of the deposit? At the time of inheritance my share (because I am
in a community property state) would be 50%?

It's much more complicated than that. But in general if you and your
wife put unequally put separate property money into a "joint" bank
account (so not tenants in common and not community property) it's
not considered a gift at that time.

I apologize for my lack of understanding, but starting at the
beginning, my intent was for my wife to have an equal share of
everything - I just didn't realize that was a gift. If my intent
is/was for my wife to have equal ownership, does that mean that my deposits are gifts at the time of deposit rather than inheritance?

If you want your wife to be an equal owner of property that is not community property, then to the extent she didn't contribute half,
that is a gift.

If the house was community property, it was a gift at that time,
so it wasn't a gift when the house was sold because your wife
already owned half at that time.

At the time of purchase I contributed 2/3 of the down payment.
1/2 of the 2/3 would be the gift? 1/2 of my share was under the
exclusion limit of $143k at the time, was I supposed to report
this gift? If so, is it ever too late to amend my return (2013)?

Not half the 2/3 would be a gift but one-quarter of the 2/3 (or 1/6)
would be a gift - that's what it would take to make you both half
owners. And the annual exemption changes with inflation, so for 2022
it's $164,000.

Again, I really appreciate all of this information. I was always searching for the meaning of a gift, and finally I have found it.
The IRS knows it all! I hope that other people married to
permanent residents will land on this page and realize these
complexities exist much earlier than I have...

There are a couple of other things you might want to know about. If
you want to make gifts of more than the annual exemption, you can do
part of it as a sale, and then forgive some in following years.

One really serious situation can occur when a non-citizen owns real
estate, especially subject to a mortgage. There is very little
estate tax exemption when that person dies. And under some
circumstances there may not be a deduction for the mortgage. I've
seen the IRS ask for more in estate tax on a property than the
decedent's equity.

One way to deal with that is to have a foreign corporation own the property. Stock in a foreign corporation is not considered a US
asset, even if it owns property in the US. So it is not subject to
estate tax in the US. But it could be subject to estate tax in the
country where the corporation is set up. So be careful if that might
be an issue.
--
Stu
http://DownToEarthLawyer.com

--

Much of this is moot since the original post stated that the spouse was a permanent resident of the US. "Green card" holders are subject to the same tax rules as citizens.

Ira Smilovitz, EA
Leonia, NJ
--

I'm clearly not an expert, but there is a clear distinction between citizens, non-citizen residents, and non-citizen non-residents on IRS form 709.

https://www.irs.gov/instructions/i709#en_US_2021_publink16784xd0e489

Transfers Subject to the Gift Tax
Gifts to your spouse

You must file a gift tax return if you made any gift to your spouse of a terminable interest that does not meet the exception described in Life estate with power of appointment, later, or if your spouse is not a U.S. citizen and the total gifts you made
to your spouse during the year exceed $159,000.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
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On Tuesday, May 10, 2022 at 1:56:00 PM UTC-4, motomachita wrote:

On Tuesday, May 10, 2022 at 7:05:58 AM UTC-7, ira.sm...@gmail.com wrote:

On Tuesday, May 10, 2022 at 12:00:54 AM UTC-4, Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person
inherits your share due to the joint tenancy, it's considered a
gift (inheritance) at that time.

Just to make sure I understand - even in a Community Property
state my deposits into a joint account are not a gift at the time
of the deposit? At the time of inheritance my share (because I am
in a community property state) would be 50%?

It's much more complicated than that. But in general if you and your
wife put unequally put separate property money into a "joint" bank account (so not tenants in common and not community property) it's
not considered a gift at that time.

I apologize for my lack of understanding, but starting at the beginning, my intent was for my wife to have an equal share of everything - I just didn't realize that was a gift. If my intent
is/was for my wife to have equal ownership, does that mean that my deposits are gifts at the time of deposit rather than inheritance?

If you want your wife to be an equal owner of property that is not community property, then to the extent she didn't contribute half,
that is a gift.

If the house was community property, it was a gift at that time,
so it wasn't a gift when the house was sold because your wife
already owned half at that time.

At the time of purchase I contributed 2/3 of the down payment.
1/2 of the 2/3 would be the gift? 1/2 of my share was under the exclusion limit of $143k at the time, was I supposed to report
this gift? If so, is it ever too late to amend my return (2013)?

Not half the 2/3 would be a gift but one-quarter of the 2/3 (or 1/6) would be a gift - that's what it would take to make you both half
owners. And the annual exemption changes with inflation, so for 2022
it's $164,000.

Again, I really appreciate all of this information. I was always searching for the meaning of a gift, and finally I have found it.
The IRS knows it all! I hope that other people married to
permanent residents will land on this page and realize these complexities exist much earlier than I have...

There are a couple of other things you might want to know about. If
you want to make gifts of more than the annual exemption, you can do
part of it as a sale, and then forgive some in following years.

One really serious situation can occur when a non-citizen owns real estate, especially subject to a mortgage. There is very little
estate tax exemption when that person dies. And under some
circumstances there may not be a deduction for the mortgage. I've
seen the IRS ask for more in estate tax on a property than the
decedent's equity.

One way to deal with that is to have a foreign corporation own the property. Stock in a foreign corporation is not considered a US
asset, even if it owns property in the US. So it is not subject to
estate tax in the US. But it could be subject to estate tax in the country where the corporation is set up. So be careful if that might
be an issue.
--
Stu
http://DownToEarthLawyer.com

--

Much of this is moot since the original post stated that the spouse was a permanent resident of the US. "Green card" holders are subject to the same tax rules as citizens.

Ira Smilovitz, EA
Leonia, NJ
--

I'm clearly not an expert, but there is a clear distinction between citizens, non-citizen residents, and non-citizen non-residents on IRS form 709.

https://www.irs.gov/instructions/i709#en_US_2021_publink16784xd0e489

Transfers Subject to the Gift Tax
Gifts to your spouse

You must file a gift tax return if you made any gift to your spouse of a terminable interest that does not meet the exception described in Life estate with power of appointment, later, or if your spouse is not a U.S. citizen and the total gifts you

made to your spouse during the year exceed $159,000.

--

I just learned something. Thank you.

Ira Smilovitz, EA
Leonia, NJ

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On 5/10/2022 12:54 PM, motomachita wrote:

On Tuesday, May 10, 2022 at 7:05:58 AM UTC-7, ira.sm...@gmail.com wrote:

On Tuesday, May 10, 2022 at 12:00:54 AM UTC-4, Stuart O. Bronstein wrote: >>> motomachita <motom...@gmail.com> wrote:

Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person
inherits your share due to the joint tenancy, it's considered a
gift (inheritance) at that time.

Just to make sure I understand - even in a Community Property
state my deposits into a joint account are not a gift at the time
of the deposit? At the time of inheritance my share (because I am
in a community property state) would be 50%?

It's much more complicated than that. But in general if you and your
wife put unequally put separate property money into a "joint" bank
account (so not tenants in common and not community property) it's
not considered a gift at that time.

I apologize for my lack of understanding, but starting at the
beginning, my intent was for my wife to have an equal share of
everything - I just didn't realize that was a gift. If my intent
is/was for my wife to have equal ownership, does that mean that my
deposits are gifts at the time of deposit rather than inheritance?

If you want your wife to be an equal owner of property that is not
community property, then to the extent she didn't contribute half,
that is a gift.

If the house was community property, it was a gift at that time,
so it wasn't a gift when the house was sold because your wife
already owned half at that time.

At the time of purchase I contributed 2/3 of the down payment.
1/2 of the 2/3 would be the gift? 1/2 of my share was under the
exclusion limit of $143k at the time, was I supposed to report
this gift? If so, is it ever too late to amend my return (2013)?

Not half the 2/3 would be a gift but one-quarter of the 2/3 (or 1/6)
would be a gift - that's what it would take to make you both half
owners. And the annual exemption changes with inflation, so for 2022
it's $164,000.

Again, I really appreciate all of this information. I was always
searching for the meaning of a gift, and finally I have found it.
The IRS knows it all! I hope that other people married to
permanent residents will land on this page and realize these
complexities exist much earlier than I have...

There are a couple of other things you might want to know about. If
you want to make gifts of more than the annual exemption, you can do
part of it as a sale, and then forgive some in following years.

One really serious situation can occur when a non-citizen owns real
estate, especially subject to a mortgage. There is very little
estate tax exemption when that person dies. And under some
circumstances there may not be a deduction for the mortgage. I've
seen the IRS ask for more in estate tax on a property than the
decedent's equity.

One way to deal with that is to have a foreign corporation own the
property. Stock in a foreign corporation is not considered a US
asset, even if it owns property in the US. So it is not subject to
estate tax in the US. But it could be subject to estate tax in the
country where the corporation is set up. So be careful if that might
be an issue.
--
Stu
http://DownToEarthLawyer.com

--

Much of this is moot since the original post stated that the spouse was a permanent resident of the US. "Green card" holders are subject to the same tax rules as citizens.

Ira Smilovitz, EA
Leonia, NJ
--

I'm clearly not an expert, but there is a clear distinction between citizens, non-citizen residents, and non-citizen non-residents on IRS form 709.

https://www.irs.gov/instructions/i709#en_US_2021_publink16784xd0e489

Transfers Subject to the Gift Tax
Gifts to your spouse

You must file a gift tax return if you made any gift to your spouse of a terminable interest that does not meet the exception described in Life estate with power of appointment, later, or if your spouse is not a U.S. citizen and the total gifts you

made to your spouse during the year exceed $159,000.


For most people, gifting enough in a single year to trigger the gift tax
for that year is a paperwork hassle (you have to figure out the gift
amount out and file Form 709). It is rarely a tax problem because the
tax due is usually zero. With a $12M/person lifetime gift+estate
exclusion, you could gift your non-citizen wife $2M this year, use up
$2M of the lifetime gift+estate exclusion, and still have a $10M+
exclusion left over for your estate when you die.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

Taxed and Spent <nospamplease@nonospam.com> wrote:

I thought unlimited gifts to spouses were permitted with no gift tax consequences.

Only when the donee spouse is a US citizen, or the gift is made to a
Qualified Domestic Trust.

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On 5/10/2022 7:53 PM, BignTall wrote:

On 5/10/2022 12:54 PM, motomachita wrote:

On Tuesday, May 10, 2022 at 7:05:58 AM UTC-7, ira.sm...@gmail.com wrote:

On Tuesday, May 10, 2022 at 12:00:54 AM UTC-4, Stuart O. Bronstein wrote: >>>> motomachita <motom...@gmail.com> wrote:

Stuart O. Bronstein wrote:

SF FS <kennet...@gmail.com> wrote:

Stuart O. Bronstein wrote:

motomachita <motom...@gmail.com> wrote:

California. Joint account. It was not intended to be a gift.

Holding something with someone in joint tenancy is considered for
convenience and not a gift. If you die and the other person
inherits your share due to the joint tenancy, it's considered a
gift (inheritance) at that time.

Just to make sure I understand - even in a Community Property
state my deposits into a joint account are not a gift at the time
of the deposit? At the time of inheritance my share (because I am
in a community property state) would be 50%?

It's much more complicated than that. But in general if you and your
wife put unequally put separate property money into a "joint" bank
account (so not tenants in common and not community property) it's
not considered a gift at that time.

I apologize for my lack of understanding, but starting at the
beginning, my intent was for my wife to have an equal share of
everything - I just didn't realize that was a gift. If my intent
is/was for my wife to have equal ownership, does that mean that my
deposits are gifts at the time of deposit rather than inheritance?

If you want your wife to be an equal owner of property that is not
community property, then to the extent she didn't contribute half,
that is a gift.

If the house was community property, it was a gift at that time,
so it wasn't a gift when the house was sold because your wife
already owned half at that time.

At the time of purchase I contributed 2/3 of the down payment.
1/2 of the 2/3 would be the gift? 1/2 of my share was under the
exclusion limit of $143k at the time, was I supposed to report
this gift? If so, is it ever too late to amend my return (2013)?

Not half the 2/3 would be a gift but one-quarter of the 2/3 (or 1/6)
would be a gift - that's what it would take to make you both half
owners. And the annual exemption changes with inflation, so for 2022
it's $164,000.

Again, I really appreciate all of this information. I was always
searching for the meaning of a gift, and finally I have found it.
The IRS knows it all! I hope that other people married to
permanent residents will land on this page and realize these
complexities exist much earlier than I have...

There are a couple of other things you might want to know about. If
you want to make gifts of more than the annual exemption, you can do
part of it as a sale, and then forgive some in following years.

One really serious situation can occur when a non-citizen owns real
estate, especially subject to a mortgage. There is very little
estate tax exemption when that person dies. And under some
circumstances there may not be a deduction for the mortgage. I've
seen the IRS ask for more in estate tax on a property than the
decedent's equity.

One way to deal with that is to have a foreign corporation own the
property. Stock in a foreign corporation is not considered a US
asset, even if it owns property in the US. So it is not subject to
estate tax in the US. But it could be subject to estate tax in the
country where the corporation is set up. So be careful if that might
be an issue.
--
Stu
http://DownToEarthLawyer.com

--

Much of this is moot since the original post stated that the spouse was a permanent resident of the US. "Green card" holders are subject to the same tax rules as citizens.

Ira Smilovitz, EA
Leonia, NJ
--

I'm clearly not an expert, but there is a clear distinction between citizens, non-citizen residents, and non-citizen non-residents on IRS form 709.

https://www.irs.gov/instructions/i709#en_US_2021_publink16784xd0e489

Transfers Subject to the Gift Tax
Gifts to your spouse

You must file a gift tax return if you made any gift to your spouse of a terminable interest that does not meet the exception described in Life estate with power of appointment, later, or if your spouse is not a U.S. citizen and the total gifts you

made to your spouse during the year exceed $159,000.

For most people, gifting enough in a single year to trigger the gift tax
for that year is a paperwork hassle (you have to figure out the gift
amount out and file Form 709). It is rarely a tax problem because the
tax due is usually zero. With a $12M/person lifetime gift+estate
exclusion, you could gift your non-citizen wife $2M this year, use up
$2M of the lifetime gift+estate exclusion, and still have a $10M+
exclusion left over for your estate when you die.

I thought unlimited gifts to spouses were permitted with no gift tax consequences.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

The OP says "We funded the account with shared funds. We have both deposited money into the joint account over many years, but I deposited more than my spouse - for the example let's say 2/3 to 1/3. "

I would like to double-check that what deposited in the account "2/3 to 1/3" is not their community income. Because if the "2/3" is his earnings and "1/3" is her earnings, and they are their community property, then his earnings are really 50/50 his v
hers and so are her earnings, thus even if 2/3 comes from his employer & 1/3 from hers, their deposits to the account really belong to them 50/50.

MK

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

On 5/11/2022 7:45 AM, Stuart O. Bronstein wrote:

Taxed and Spent <nospamplease@nonospam.com> wrote:

I thought unlimited gifts to spouses were permitted with no gift tax
consequences.

Only when the donee spouse is a US citizen, or the gift is made to a Qualified Domestic Trust.

Thanks. But there is this:

Generally, spouses who are both US citizens may transfer unlimited
amounts to each other without incurring any gift tax, as any assets in
excess of the couple’s combined estate tax exemption ($24.12 million in
2022) will be taxed at the death of the surviving spouse and
transferring assets to the survivor only defers the tax that the IRS
will eventually collect.

Gifts to a non-US citizen spouse, however, are limited. Since a non-US
citizen spouse may not be subject to the US estate tax, one cannot
transfer unlimited assets to a non-US citizen spouse since that
transferred wealth could potentially avoid US estate taxation upon the
non-US citizen spouse’s death. Thus, when the recipient spouse is not a
US citizen, and regardless of whether the non-US citizen spouse is a
resident or nonresident of the United States, the amount of tax-free
gifts is limited to an annual exclusion amount. *****For calendar year
2022, the first $164,000 of gifts to a spouse who is a non-US citizen
are not included in the total amount of taxable gifts.*****

https://www.morganlewis.com/pubs/2021/11/irs-announces-increased-gift-and-estate-tax-exemption-amounts

I didn't take the time to find the basis for this statement in the code, perhaps someone can post that.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)

Maria Ku <mariakucpa@gmail.com> wrote:

The OP says "We funded the account with shared funds. We have both
deposited money into the joint account over many years, but I
deposited more than my spouse - for the example let's say 2/3 to
1/3. "

I would like to double-check that what deposited in the account
"2/3 to 1/3" is not their community income. Because if the "2/3"
is his earnings and "1/3" is her earnings, and they are their
community property, then his earnings are really 50/50 his v hers
and so are her earnings, thus even if 2/3 comes from his employer
& 1/3 from hers, their deposits to the account really belong to
them 50/50.

Good point - it's not a gift to the extent it was community property
when earned.

The big problem will come if wife dies first. As a noncitizen her
estate tax exemption will be minimal. And unless she discloses her
world-wide assets on the 706, the IRS won't allow a deduction for any
mortgage on the property. If the tax is 40% and the equity is 35%,
her estate will owe more on the house than he equity is.

--
Stu
http://DownToEarthLawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)