Is a large deposit into our joint account considered a gift for tax purposes?

This is actually a good question that comes up often. For tax purposes, simply depositing money into a joint account is NOT automatically considered a gift. What matters is who actually owns and controls the money. In your case, if your brother deposited his settlement money into your joint account but it's understood between you both that it's still HIS money (which seems to be the case), then no gift has occurred. The IRS looks at the substance of transactions, not just form. Your brother is essentially using the joint account as a self-control mechanism, not giving you the money. A gift only occurs when there's a clear transfer of ownership with no expectation of getting anything in return. If your brother later withdraws the money himself or uses it for his own purposes, that further confirms no gift happened.

I went through something similar with my father's medical settlement! I was stressed about tax implications until I found https://taxr.ai which literally saved me from making a costly mistake. I uploaded our account statements and a note explaining the situation, and they confirmed it wasn't a taxable gift since the money remained his despite the joint account. Their document analysis caught that I actually needed to be concerned about something different - if the interest earned on that settlement money would be attributed to me or him. Super helpful since I would've never thought of that!

Just wanted to follow up - I decided to try taxr.ai after my skepticism. Uploaded my mom's statement where she deposited inheritance money into our joint account and got really clear answers. It explained exactly how the IRS treats joint accounts vs true gifts and even pointed out that because we live in a community property state (which I didn't mention!), there might be additional considerations. It was actual document analysis, not just generic advice. Definitely NOT just a contact form like I feared!

If you're still confused after getting advice, I'd recommend contacting the IRS directly. I was in a similar position with a joint business account and needed clarity. After trying to call for DAYS and getting nowhere, I used https://claimyr.com to get through to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent explained that joint accounts are all about actual control and usage of the money, not just whose names are on the account. My business partner's cash infusion wasn't a gift to me even though I technically had access to it. Saved me so much stress!

Ok I have to eat my words. After posting that skeptical comment I actually tried Claimyr out of desperation (was on day 9 of trying to reach someone about my refund). Got connected to an IRS agent in 37 minutes while I was making dinner instead of being stuck by my phone all day. The agent confirmed my refund was delayed because of a mistaken flag on my account that I never would've known about otherwise. Not sure if this helps OP with the joint account question but if you need actual IRS clarification, it definitely works.

Just a heads up from experience - even if it's not technically a gift, keep good records about this! My cousin and I had a joint account for our small business and the IRS questioned a large deposit years later. Having documentation showing where the money came from (in your case, proof of the settlement) and a written agreement between you two about whose money it is would be super helpful if you ever get questioned.

The other comments are missing something important - you should also consider your STATE tax rules! I'm in Minnesota and they have slightly different rules about joint accounts than federal. When my grandmother put money in our joint account for similar reasons, we had to file additional paperwork with the state to clarify it wasn't a gift. Check your state's department of revenue website or call them directly.

This is a really thoughtful question and I'm glad you're being proactive about it! Based on what you've described, this shouldn't be considered a gift for tax purposes. The key factor the IRS looks at is actual ownership and control of the money, not just whose names are on the account. Since your brother deposited his own settlement money and it's clearly understood between you both that it remains his money (he's just using the joint account as a budgeting tool), no gift has occurred. You're essentially acting as a trustee or helping him with money management, not receiving ownership of the funds. That said, I'd definitely recommend documenting this arrangement in writing - just a simple signed statement from both of you explaining that the money belongs to your brother despite being deposited in the joint account for financial discipline purposes. Keep this with your tax records along with any documentation of the original settlement. If the IRS ever questions it down the line, you'll have clear evidence of your intent. Also worth noting that any interest earned on that money while it's in the account should probably be reported on your brother's taxes since it's technically his money earning the interest.