
If you and your spouse have a joint bank account, you may be wondering who's responsible for paying taxes on the income earned from it. In the US, joint account holders are considered joint filers and must report their combined income on a single tax return.
As a joint filer, you and your spouse are both responsible for paying taxes on the income earned from your joint account, regardless of whose name is on the account. This means you'll both be liable for any taxes owed or penalties incurred.
Each spouse's income is combined and reported on a single tax return, so you can't just split the taxes or claim half the income as your own. This is why it's essential to understand how joint account income is taxed and what your responsibilities are as a joint filer.
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Who Pays Taxes on Joint Accounts
Who Pays Taxes on Joint Accounts?
By default, 50% of the interest (or dividend income) arising from a joint account is treated as taxable on each account holder, regardless of who contributed the funds or owns the underlying assets. This is the case even if the beneficial entitlement is unequal.

In Australia, the Australian Taxation Office (ATO) has determined that interest income on a joint bank account is assessable to the account holders in proportion to their beneficial ownership of the money in the account. Unless there is evidence to the contrary, it is presumed that joint account holders beneficially own the money in equal shares.
You can rebut this presumption by providing evidence of unequal ownership, such as who contributed to the account, in what proportions, and who drew on the account. For example, if one person contributed all the money and the other only drew funds once, the first person may be considered the sole beneficial owner.
Here are some key points to consider:
- Joint account holders may elect to be taxed in line with their respective beneficial interests, but this election is permanent and cannot be backdated.
- Interest income on a joint bank account is assessable to the account holders in proportion to their beneficial ownership of the money in the account.
- Unless there is evidence to the contrary, it is presumed that joint account holders beneficially own the money in equal shares.
Joint Spousal Accounts
If you have a joint account with your spouse or civil partner, the tax implications can be a bit tricky. By default, 50% of the interest or dividend income is taxable on each of you, regardless of who actually contributed to the account or owns the underlying assets.

However, you and your spouse or partner can elect to be taxed in line with your respective beneficial interests, which means you can choose to pay tax on the income based on who actually owns it.
This election is made on form 17, and once you've made it, it's permanent unless there's a change in beneficial interest or you separate as a couple.
You'll need to sign and date the form, and it must reach HMRC within 60 days of being signed. If it doesn't, the election is invalid and you'll need to make a fresh one.
If you're unsure about who should pay tax on your joint account, you can get in touch with the relevant authorities for guidance.
Here's a simple breakdown of the key points to consider:
- Default tax split: 50% taxable on each account holder
- Election option: tax based on beneficial interests
- Form 17 required for election
- 60-day deadline for HMRC receipt
Joint Signatory
Being a joint signatory on a bank account doesn't necessarily mean you're responsible for paying taxes on the interest income.
If you're only added to the account for backup purposes, such as in case the account owner can't manage their finances, you might not be considered the beneficial owner of the account.

In the case of Adrian's aunt, she had a bank account in her name and Adrian was a joint signatory, but she maintained control over the account and its funds.
You won't be responsible for paying taxes on the interest income if you're not entitled to personally receive any money from the account.
The key is to establish that you're not the beneficial owner of the account, which means you don't have a vested interest in the funds.
If all the funds in the account belong to the account owner and you're only added for backup purposes, you won't be assessable on the interest income.
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Tax Implications
The ATO presumes that joint account holders have equal ownership of the money in the account, unless there's evidence to the contrary.
You can rebut this presumption by providing evidence such as who contributed to the account, in what proportions, and who used the money as their own property.

If you have a joint account with your spouse or civil partner, by default, 50% of the interest is taxable on each of you. However, you can elect to be taxed in line with your respective beneficial interests instead, if these are unequal.
Here's a summary of the tax implications for joint accounts:
In some cases, even if you're a joint signatory on an account, you may not have any beneficial ownership of the money in the account. For example, if you're only operating the account for someone else due to their ill health.
Other Joint Accounts
Other joint accounts are taxed differently than those of married or civil partners. The tax implications for joint owners of property, such as a joint bank account or jointly-held shares, are significant.
In most cases, joint owners are taxed on the share to which they are entitled, which is often 50:50, even if contributions to the account are unequal.
A different take: 1031 Exchange Multiple Owners
Tax on Joint Accounts

Tax on joint bank accounts can be a bit tricky, but it's essential to understand who's responsible for paying the tax. The Australian Taxation Office (ATO) says that interest income on a joint bank account is assessable to the account holders in proportion to their beneficial ownership of the money in the account.
Unless there's evidence to the contrary, it's presumed that joint account holders beneficially own the money in equal shares. However, relevant evidence can include information about who contributed to the account, in what proportions, and who drew on the account and used the money as their own property.
The tax implications of joint accounts can be complex, especially when one of the account holders passes away. In this situation, the new owner will be responsible for paying any taxes owed on the income earned by the account.
It's worth noting that the amount of taxes owed will depend on the type of account. If it's a basic checking or savings account, the amount could be negligible, but if it's an investment account, the taxes due could be higher.
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Here's a summary of the tax rules for joint accounts:
- Interest income on a joint bank account is assessable to the account holders in proportion to their beneficial ownership of the money in the account.
- Unless there's evidence to the contrary, it's presumed that joint account holders beneficially own the money in equal shares.
- Relevant evidence can include information about who contributed to the account, in what proportions, and who drew on the account and used the money as their own property.
- The new owner will be responsible for paying any taxes owed on the income earned by the account after one of the joint owners passes away.
- The amount of taxes owed will depend on the type of account.
By understanding these tax rules, you can avoid any potential issues with your joint bank account.
Example 1 – Joint Bank Account
Joint bank accounts can be a convenient way to manage finances, but they can also create tax complexities. Barbara and Chelsey's situation is a good example of this. They had a joint bank account, and the interest earned was split equally between them, until Barbara discovered that Chelsey had contributed all the money to the account and treated the interest as her own.
The Commissioner amended their income tax assessments accordingly, making Chelsey responsible for all the interest income. This shows that the taxman looks at who has beneficial ownership of the money in the account, not just who's listed as a joint account holder.
In cases where joint account holders are not married or in a civil partnership, the tax is split 50:50, unless there's evidence to the contrary. This is usually the case, unless the account holders can prove otherwise.
Additional reading: Taxes on Dividends vs Interest
Here are some factors that can help determine who has beneficial ownership of the money in a joint bank account:
- Who contributed to the account?
- In what proportions were contributions made?
- The nature of the contributions?
- Who drew on the account and who used the money as their own property?
- Any evidence that the account holders hold money in the account on trust for other persons?
Frequently Asked Questions
Who gets the 1099 for a joint account?
For joint accounts, only the primary account owner receives the 1099, as interest is reported under their Social Security number. This is because only one 1099 is generated per account.
Sources
- https://www.litrg.org.uk/savings-property/tax-savings-and-investments/joint-income-savings
- https://capitalq.com.au/news/tax-on-joint-bank-accounts/
- https://money.stackexchange.com/questions/54918/when-you-have-a-joint-bank-account-who-pays-the-1099-int-taxes
- https://ttlc.intuit.com/community/taxes/discussion/joint-account-with-parents-my-tax-burden-and-locking-away-funds-for-the-next-year/00/43287
- https://ortizandortiz.com/blog/joint-bank-account-with-parent-and-parent-dies/
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