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

But how would they track whose money is whose? Once money is deposited into a joint account, isn't it all considered jointly owned? And what if the mom passes away - would the IRS then consider this a gift retroactively?

The IRS typically looks at who contributed the funds to determine ownership, even in a joint account. Many people keep separate records or use separate accounts to make this clear. There's no automatic assumption that deposits become gifts just because they're in a joint account. If the mother passes away, the money she contributed to the joint account would generally be considered part of her estate for tax purposes, not a prior gift. However, joint accounts typically pass to the surviving owner outside of probate, which is one reason they're commonly used.

Does it actually work with bank statements? I thought tax document analyzers only worked with like W2s and tax returns and stuff. How accurate was it for figuring out the gift tax situation?

Sounds like another scam tbh. How do we know they're not just harvesting bank data? Did they actually tell you anything that wasn't just generic advice you could get for free?

It absolutely works with bank statements! I was surprised too, but they have this smart system that can recognize different types of financial documents, including bank statements, and then apply the relevant tax rules to your situation. The analysis it gave me was definitely not generic - it specifically identified which withdrawals from my joint account might be considered gifts based on the deposit patterns and account ownership information. It even referenced the specific IRS regulations that applied to my situation, which helped me explain things to my accountant.

Wait, you can pay someone to wait on hold for you?? How much does that cost? Seems like it would be expensive for them to have people just sitting around on hold all day.

Yeah right. As if the IRS actually answers their phones. I've tried calling them multiple times and never got through. How can this service magically get someone on the line when millions of calls go unanswered every year?

They don't have people sitting around - it's an automated system that holds your place in line and then connects you with the IRS when your turn comes up. It's super efficient and means you don't have to waste your whole day with a phone glued to your ear. The IRS does answer phones, but the wait times can be ridiculous - like 2-3 hours sometimes. This service just handles that part for you. When they get through, you get a call and are connected with the agent who's already on the line. It's not magic, just a smart way to avoid the hold time.

That's actually really good advice and something I've been considering. Did you have trouble separating your finances from the joint account holder? I'm worried that if I pull my money out suddenly it might look suspicious for tax purposes.

When I separated my finances from my dad's joint account, I opened a new account first, then gradually moved over my direct deposits and auto-payments over a period of about a month. That way there wasn't a sudden large withdrawal that could raise flags. I also kept really clear records of which money was mine versus his in the joint account, and made sure I only took my portion. For your situation, since the deposit is clearly your mom's settlement, you should have no problem leaving that untouched while taking your pre-existing balance.

This is the right answer! Keep the money separate from the beginning. My parents did this with some inheritance money and it made everything so much cleaner for taxes. Just make sure both names are on the new account.