Do you have a joint account with a spouse or parent? Do this to avoid tax problems.

Copyright © HT Digital Streams Limit all rights reserved. Working wife is often tempted to shift income to non-working partners whose taxable income can fall under the threshold. Summary joint bank accounts are useful, but can also create tax headaches unless handled carefully. Opening a joint bank account with a spouse or parent can make it easier to manage your finances, but it can also create tax headaches unless handled carefully. Here are some examples that illustrate this. Mr. A has a joint bank account with his non-working spouse, which is the primary container. Although Mr. A deposit the funds, the bank can still report the interest income in the name of the spouse, as most banks charge tax on the source (TDS) in the name of the first container, regardless of who contributed to the funds. For the earner, the bill “it is requested to move real spouses to move income to non-working partners, whose taxable income can fall under the threshold. He warned that such male adjustments should be corrected. “The IT section can question you or be large amounts involved because the tax principle is simple: Income must be taxed in the hands of the person who deserves it,” he said. If one account holder does not work, it is best to say the bank in advance to pull TDs against the earner pan from the container. “There is a specific provision under the IT rules that enable a non-earnings spouse to declare to the bank that the income belongs to the man. In such cases, TDS must be issued in his name as he will pay taxes on it,” Feight added. If both containers work and contribute funds, each must pay taxes in relation to their contribution, he added. Double reporting of TDS takes on another matter, in which Mr. A and his son have a joint account. Mr. A opens a fixed deposit (FD) and earns interest, but the interest also reflects in his year’s annual Information Statement (AIS), even though he was not the depositor. Although rare, such cases occur when interest income is labeled to both containers. “Here they must prove that the source of the FD was the income of the Father, not the Son. The boy must also use the ‘Feedback’ option in AIS to mark the entry as’ not fully correct -income that is not taxable in my hands’ to correct the mistake, “said Ashish Karundia, ‘club provisions that give money to a non -working spouse as a working spouse? FD rates? Here, club provisions apply and the tax liability falls on Mr. In the end, joint accounts can be helpful, but it should maintain some work. If a name is added for ease only, you must inform the bank so that revenue is reported only in the name of the true earner, “Karundia said. Catch all the business news, market news, news reports and latest news updates on live mint. Download the Mint News -Dapp to get daily market updates.