Joint accounts owned by unmarried couples can create tax headaches. To see how this might occur, suppose that Mark Nixon and Paige Owens are unmarried but living together. Mark earns the couple’s income, which goes into a joint bank account.
In this situation, every check that Paige writes for her personal use might be considered a gift. That’s true even if Mark writes checks to pay for personal items Paige has charged on a credit card. This problem is not easy to resolve if Paige spends over $11,000 from the joint account on herself–that’s the annual gift tax exclusion amount for 2005.
The best way to deal with this issue is to keep careful records of all expenses from joint accounts. Money that is used for common expenses generally won’t be considered a taxable gift.
