Transfering from joint bank account to personal account: implications for gift tax

Question

Say person A has a bank account with US$20k in it, and then A adds B (not a spouse) to the account, so it's now a joint account. B then withdraws the money and deposits it to his personal account. Would this be considered A's gift to B and reported to IRS?
Would things be different if A and B establish a joint account and then A deposits $20k to the account, and then B transfers the money to his personal account?

mhoran_psprep · Answer

The order of operations doesn't make a difference. The bank doesn't have a mechanism for reporting the transactions, it is up to the sending party to document the transaction on the appropriate tax forms.
I am assuming that there is not another non-gift reason for the transfer. An example of a non-gift transfer would be to send funds to pay for the joint vacation. I am also assuming that there isn't a cash deposit what would cause the bank to report that part of the transaction.
When close to the annual limit that wouldn't require the amount to be reported, the two methods used to legally avoid the tax issue is to spread the transfer over two years, or if one of the people is married it can be split into two transfers. If both are married, it can be split into 4 transfers.

Transfering from joint bank account to personal account: implications for gift tax

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