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Gift Tax consequences of joint accounts between adult family members


A bank pays out airlines miles based on your balance per month. I want the miles , but my parents have the money. Could we setup a joint account with their money and me getting the miles? What are the tax consequences of this? My understanding is airline miles are not taxable. Also I can NOT be claimed as a dependent on their tax return.
My understanding is one can only receive $12,000 free of taxes as a gift. So how would it be possible to open a joint account valued higher than that? Doesn't a join account mean you automatically have access to all the money in the account?
Reply to
Homer Simpson

I would never open a joint account with my kids. NEVER. Creates all kinds of difficult issues.
Reply to
PeterL

Don't know about your particular plan, but with mine we can buy a plane ticket w/ the points for a family member. Have your parents just buy them for you.
Chip
Reply to
Chip

Homer Simpson writes:
With brokerage accounts containing securities, yes, joint ownership may mean that the second owner added has been given a gift. Typically, actually, you cannot just retitle the account, but rather would have to open a new joint account and then transfer the securities from the sole owner account into the joint account. That transfer, actually, is when the gift is made.
Bank accounts, however, are different. With a common "revocable" joint bank account, a gift is only considered to have been made when and if the other joint owner (you in this case) actually makes withdrawals. But make no mistake - the joint owner absolutely may make withdrawals.
So no - if you are added as a joint owner of the bank account, it's possible that no gift issues will have been made. However, there are potentially serious estate management issues involved. Make sure that you all are certain that this is what you actually mean to happen.
Chances are that you all really don't actually want to make this a joint account but rather, perhaps, just have your parents get the miles and buy you plane tickets as they like. That does just what you want and nothing else.
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Reply to
BreadWithSpam

My situation is a little more complex as I need the miles to be in my account. I am fully aware that my parents could get the miles and redeem for tickets for anyone . I have another need for the miles as I am trying to increae my lifetime miles with the airline American airlines offers lifetime gold status if you have 1,000,000 miles. I already have close to 900,000. My parents only have a few hundred thousand.
Reply to
Homer Simpson

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