Question regarding gift tax on going from a joint tenant account to an individual account for NRA

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whiterabbit87
Posts: 15
Joined: Thu Jan 07, 2021 10:38 pm

Question regarding gift tax on going from a joint tenant account to an individual account for NRA

Post by whiterabbit87 »

Hello bogleheads
I’ve been reading about how owning property in joint tenancy is not great in case one of the account holder dies.Right now we have a joint tenants with rights of survivorship account(JTWROS) with 3 family members on TD Ameritrade.We are looking to transfer the assets and go into individual account ownership with each of the 3 family members having an individual account.We would transfer US domiciled ETF’s to each account.My question is would we be liable for gift tax if we would transfer more than $15k, which I understand is the anual exclusion? Or would it be best to liquidate everything wire the money back to our home country and then wire the money back to the TD Ameritrade accounts?
Thanks in advance for any replies!
TedSwippet
Posts: 3695
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Question regarding gift tax on going from a joint tenant account to an individual account for NRA

Post by TedSwippet »

whiterabbit87 wrote: Sat May 08, 2021 9:41 am We would transfer US domiciled ETF’s to each account. My question is would we be liable for gift tax if we would transfer more than $15k, which I understand is the annual exclusion?
There should be no gift tax liability.

United States Estate and Gift Taxation of the Nonresident Alien | mgi
- Intangible property: Generally not subject to gift tax, even if intangible property has situs in the U.S. Gifting of stock in a U.S. corporation is not subject to gift tax, even though the stock would be subject to estate tax.
- Cash: The Internal Revenue Service and the courts generally have taken the position that cash constitutes tangible personal property, so that cash gifts from funds on deposit in a U.S. bank are subject to gift tax, even though the deposit would not be subject to the estate tax.
Another epic absurdity in US tax laws. You could not make this stuff up.
Topic Author
whiterabbit87
Posts: 15
Joined: Thu Jan 07, 2021 10:38 pm

Re: Question regarding gift tax on going from a joint tenant account to an individual account for NRA

Post by whiterabbit87 »

Thanks so much for your response ted.Earlier this year we transferred around $20k in cash from a JTWROS with 3 account holders to another JTWROS with the same 3 account holders.Since we are the same account holders on both accounts I suspect that even though it is above the $15k exclusion limit there should be no gift tax since the owners are the same, would my reasoning make sense?

TedSwippet wrote: Sat May 08, 2021 10:53 am
whiterabbit87 wrote: Sat May 08, 2021 9:41 am We would transfer US domiciled ETF’s to each account. My question is would we be liable for gift tax if we would transfer more than $15k, which I understand is the annual exclusion?
There should be no gift tax liability.

United States Estate and Gift Taxation of the Nonresident Alien | mgi
- Intangible property: Generally not subject to gift tax, even if intangible property has situs in the U.S. Gifting of stock in a U.S. corporation is not subject to gift tax, even though the stock would be subject to estate tax.
- Cash: The Internal Revenue Service and the courts generally have taken the position that cash constitutes tangible personal property, so that cash gifts from funds on deposit in a U.S. bank are subject to gift tax, even though the deposit would not be subject to the estate tax.
Another epic absurdity in US tax laws. You could not make this stuff up.
TedSwippet
Posts: 3695
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Question regarding gift tax on going from a joint tenant account to an individual account for NRA

Post by TedSwippet »

whiterabbit87 wrote: Sat May 08, 2021 11:27 am Earlier this year we transferred around $20k in cash from a JTWROS with 3 account holders to another JTWROS with the same 3 account holders.Since we are the same account holders on both accounts I suspect that even though it is above the $15k exclusion limit there should be no gift tax since the owners are the same, would my reasoning make sense?
This sounds to me like a simple account transfer across two different providers, so entirely not any form of gift.

It is absolutely insane that nonresident aliens should even have to consider the possible application of US gift and estate taxes on completely ordinary actions involving wholly unexceptional amounts of cash. More proof, if any were needed, that non-US persons should generally do their utmost to avoid any and all direct contact with the US's arbitrary and xenophobic tax system.
Topic Author
whiterabbit87
Posts: 15
Joined: Thu Jan 07, 2021 10:38 pm

Re: Question regarding gift tax on going from a joint tenant account to an individual account for NRA

Post by whiterabbit87 »

Thank you so much for your time and help ted.
TedSwippet wrote: Sun May 09, 2021 3:52 am
whiterabbit87 wrote: Sat May 08, 2021 11:27 am Earlier this year we transferred around $20k in cash from a JTWROS with 3 account holders to another JTWROS with the same 3 account holders.Since we are the same account holders on both accounts I suspect that even though it is above the $15k exclusion limit there should be no gift tax since the owners are the same, would my reasoning make sense?
This sounds to me like a simple account transfer across two different providers, so entirely not any form of gift.

It is absolutely insane that nonresident aliens should even have to consider the possible application of US gift and estate taxes on completely ordinary actions involving wholly unexceptional amounts of cash. More proof, if any were needed, that non-US persons should generally do their utmost to avoid any and all direct contact with the US's arbitrary and xenophobic tax system.
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