QUESTION
Is it legal to keep money in someone else's bank account? Is that person liable for taxes on those deposits?
Asked on Oct 20th, 2012 on Taxation - Florida
More details to this question:
If I deposit my post-tax paychecks into a friend’s bank account, is that legal? And, would my friend be liable for taxes just because the money passes through his account? The reason for doing this is to keep my own bank account from being garnished by creditors. So, I am paying taxes and my friend is not keeping any of the money for herself. Other than the "moral" question of avoiding my creditors, am I breaking any laws or putting my friend in harm’s way with taxation? Thanks for the help.
2 ANSWERS
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Yes.
Answered on May 28th, 2013 at 2:31 AM
David John Tybor
Assuming that you are putting the money into an account that is only in your friend's name and not jointly with you, then you have exposure on several creditor issues. First, it is illegal to "hinder or delay" your creditors. Under both bankruptcy law, and florida state collection law, you have made a "preferential transfer" that can be called back by a trustee in bankruptcy or uncovered during "discovery" in state collection efforts. Secondly, your creditors could arrange to have your wages garnished up to 25% prior to you even putting the money into your friend's account. There are legal options that you have to protect your assets, and these options can help you resolve the issues with your creditors.
Answered on Oct 24th, 2012 at 7:25 AM