Gifts from a joint account?

The answer is, it depends.

Do you live in a community property state? If so, then half the money in your account belongs to each of you, and you can make one check for $28,000 without any consequences.

If you're not in a community property state, you will have to figure out how much legally in that account belongs to you and how much to your wife. If it's exactly 50/50 ownership, then you can handle it like community property.

If it's not 50/50 but you will want to make the full $28,000 gift, you can do a gift "split," under which the IRS treats the money as coming half from each of you, even though in realilty it doesn't. To do this you have to file a gift tax return and check the "gift split" box to claim the exemption.

NY, which I think is not community property.

I guess we both put about the same amount into the checking account, and most of the checks out are for joint expenses. But how on earth would we determine it is 50/50? And how on earth would the IRS determine it wasn't?

And what would happen if the IRS insisted it wasn't 50/50? Would we have to pay gift tax, or would it just go against our lifetime exemption.

I found this on the NYS Gift Tax Return instructions: "the establishment of a joint bank account in a New York State bank is a gift of a one-half interest in the account.' That implies that as soon as money is in a joint account, it is half owned by each spouse. No?

I found a webpage from a Maine lawyer that said that gifts from a joint account were considered to be half from each person. Maine is not a community property state, if I am reading things right.

If you can't the remedy is to file a gift tax return. No gift tax will be incurred - you just need to notify the IRS that you are treating it as half coming from each of you.

There would likely not be any gift tax currently. But there might be some estate tax assessed after you and your wife both die, if your total estates exceed the equivalent of about $11 million (adjusted for inflation).

Right. That's the rule under New York law, and you can rely on that.

On this point the laws of each state may vary. So while a rule from one state may be influential, it's not actual authority for what happens in another state. This is true even though you are talking about federal tax.