Joint Accounts and Tax Implications

Hi everyone!  My handsome British hubby and I just got married, and we are currently figuring out what to do with our bank accounts (i.e., keep them separate or create a joint account).  I just moved to the UK this week on my spousal visa.  I would prefer that we maintain a joint savings account and keep separate individual accounts for our own "fun money" to play with.  He only wants to keep a small joint account for spending purposes, and he does not want to join our savings accounts for fear that it will subject him to US tax liability.

Before we make this decision, I was wondering if any US/UK married couples have any regrets for entering into a joint account with their spouse from a tax liability standpoint.  I understand that I will have to report our joint bank account to the US tax authorities if we do, in fact, open a joint account.  I am just hoping to obtain advice from other couples who have gone through this decision-making process, especially those who have separate US and UK accounts that may or may not be joined.

Thanks!

My husband and I have kept completely separate accounts for a few reasons, but one was the reporting issue. Unless you have lots of money and make a ton of interest you are unlikely to have a tax liability, but the reporting can get a bit onerous. We have one small emergency savings account in joint names, but otherwise we are choosing to keep them separate until I've renounced my US citizenship.

He only wants to keep a small joint account for spending purposes, and he does not want to join our savings accounts for fear that it will subject him to US tax liability.

It won't subject him to a US tax liability.  Unfounded fear.

Thank you both for your feedback!  He owns his own company, so I think he is extra cautious about anything being reported to the US tax authorities for fear that he would somehow be taxed there.  I have no desire to open a joint account with him on any of his business accounts - I just want to join our personal savings accounts. 

I would keep your accounts separate and you should file "married separately", just to keep things simple and soothe the fears of your husband.

I would keep your accounts separate and you should file "married separately", just to keep things simple and soothe the fears of your husband.

Wouldn't we always file "married filing separately" no matter what? I'm the only one who is the US citizen and DH has never lived in the US. He basically doesn't exist as far as the US govt and IRS are concerned, right? I was planning on getting a joint account for DH and me for practical reasons. I'm really hoping it's not a problem.

No one is forcing you to file MFS, you can equally file MFJ. Each choice will have its own pros and cons. For most people here MFS is the way to go but that won't be the case universally.

And, no, getting a joint account is not any kind of problem. The only thing is when you file your FBAR, if you are required to file one, you need to list your DH as a joint account holder. Literally just list his name. But you are already listing his name on your tax return so it also being on the FBAR isn't some huge disclosure. The whole avoiding joint accounts is an over reaction, IMO.

Joint accounts are not a problem for taxes so much as reporting. You'll need to file forms TDF 90-22.1, 8938 and DS5513 Section C or be subject to penalties that may be multiples of the maximum account balance. Not heard of DS5513? OK - don't panic everybody - it's a form about your mother's prenatal appointments. But then a lot of people never heard of TDF 90-22.1 (commonly known as the FBAR) and this has cost them some grey hairs at a minimum and in some cases a lot more. Best to keep joint accounts to a minimum for safety's sake.

I have never had complicated taxes. I think we will be using an accountant this time around any way- part year resident + marriage + move + (possibly) joint accounts + overseas income.... yeahhhh....

We've always had joint accounts for personal funds (savings and checking). Way back when, DH's business AC was separate and I had no signature authority. I always filed MFS before we moved to the USA.

Now we are back in the UK, but DH is also now a USC. So its MFJ.

If your DH is NOT a USC or green card holder, MFJ will complicate things immensely. As far as FBAR goes, this is a REPORTING form, not a red flag to come after you for more tax. And no matter what, unless you decide to file a joint return, your DH's income is not subject to US tax.

If DH has never lived or worked in the US and not a USC, he is a NRA spouse. For folk with ordinary employment income, and a bit of interest, your tax return won't be all that complicated. After you qualify for the earned income exclusion, you will likely owe no tax in the US, but you will need to continue filing if you meet the thresholds (and maybe should file even if you don't need to).

Personally, I wouldn't be concerned about joint versus individual accounts. Many accountants try to scare you, IMHO because they like to 'awfulize' things. One of the happiest days of my life is when a CPA who was also a personal friend told me "we have to charge you a minimum fee to prepare your return; you don't need to spend that money."

MFS will definitely make your taxes simpler. I've never understood the need for joint accounts, but a joint checking account won't have any tax consequences......other than potential reporting on FBAR etc.