Bbva and Banco Sabadell Warn: Pay Close Attention to the Fine Print of This Account

Opening joint accounts with children has become an increasingly common practice among many parents. This decision is driven by the intention to ensure financial support for their children in the future while joining them in managing their finances.

However, BBVA and Banco Sabadell have wanted to warn about the risks and complications that this practice can bring, especially regarding tax obligations.

Both banks recommend being especially careful with the fine print when deciding to open a joint account. The idea of having an account that allows shared management between parents and children may seem advantageous. But it is important to consider the tax implications that could arise.

BBVA and Banco Sabadell Want to Save You a Displeasure

When parents open a joint account with their children, they assume everything is clear. The money deposited in the account will be a backup for the children's future, and the parents will be able to help them quickly in case of an emergency. However, this relationship is not always so simple from the perspective of the Tax Agency.

The tax authorities may interpret the returns caused by the account, such as interest, differently. BBVA and Banco Sabadell warn that if an account is in the name of both parent and child, the returns caused, such as interest, must be considered investment income. This means that these earnings must be included in the income tax return, reports COPE.

The key here is that if the parents are the true owners of the money in the account, they must prove it. If it is not clarified who owns the capital in the account, the tax authorities could interpret that the returns caused must be declared by the children. This could be an inconvenience if it is not clear whose money is deposited.

Parents Must Prove Their Contribution of the Money

This point is essential to prevent children from having to pay taxes on those returns. According to BBVA and Banco Sabadell, it is crucial that if the parents are the ones who have actually contributed the money, it is clearly stated. Especially so that they are the ones who include the returns in their own income tax return.

Additionally, the banks also warn of another issue. If the ownership of the money in the account is not clarified, the tax authorities could ask the children to pay taxes on the capital. This could create an unexpected tax burden for the younger ones, who are not used to having to deal with this type of obligation.