Federal Gift Tax Return Requirements, Forms, and Instructions
This article provides information on when a federal gift tax return is required, deadlines for filing, forms used to file a U.S. gift tax return, and a checklist of items you will need to prepare and submit a gift tax return. Although you may want to make an immediate gift to a child, grandchild or other family member as part of your estate plan, review the information below and consult a tax professional about gift tax and GST tax before completing the transfer.
Is a Gift Tax Return Required?
The question of whether a federal gift tax return is required may come up when preparing an individual tax return, Form 1040, or when preparing tax returns for an estate or trust, Form 1041. To determine whether a gift tax return is required, several factors must be considered. First, you will need to know the lifetime estate tax exclusion amount. For information on the exclusion amount, go to
gifts and gifting.You will also need to know the annual gift tax exclusion amount for the applicable tax year. For example, if the gift was made in 2019, you will need to know the 2019 annual gift tax exclusion amount. See 2019 Gifting Limits.If the gift will be made in 2020, refer to the 2020 Gifting Limits. The amount of gifts made in a particular tax year that exceed the annual gift tax exclusion amount will be subtracted from the person's lifetime estate tax exclusion amount. For gifts made via trust, individual beneficiaries are considered separate gift recipients or donees for purposes of the annual gifting limits.A gift tax return must be filed for every tax year in which a reportable gift is made. For a detailed list of the types of transfers that must be reported on a federal gift tax return, refer to the Instructions for Form 709.If spouses are gift splitting, IRS Form 709 must be filed even when the gift is not taxable.For gifts in trust, you may need to file a gift tax return to make a QTIP election. See
QTIP Trust.Reviewing this page will help you gain a better understanding of whether a gift tax return may be required, but always consult a CPA or other tax professional about how to prepare your gift tax return and calculate any taxes owed.
List of Items Needed For Gift Tax Return
When preparing a gift tax return or meeting with a tax professional about gifting, you may need the following documents and information:1. Tax returns of a deceased spouse, if applicable. Copies of IRS Form 706 may be needed to complete the gift tax return. See tax returns due for deceased.2. The exemption amounts and credit amounts that will be applied.3. A list of deductions that will be applied, such as the marital deduction and charitable deduction. For example, if you are claiming a marital deduction for spousal gifts, that information must be listed on IRS Form 709.4. Dates for all events that need to be reported on the return, such as the date gifts were completed or property was transferred.5. The value of items being reported on the return. You will need to provide a valuation based on fair market value on the gifting date, along with information on how you calculated this amount. Be prepared to provide an appraisal or other supporting documentation.6. Detailed information on the gifted property, including a description. If real estate was gifted, the property address and legal description from the deed may be required. If stocks or other securities were gifted, the CUSIP number and related information may be required. See Gift Stock to Children. You may also need to report the amount of any payment or other consideration the donor received as part of the transfer.7. The donor's basis in the gift. For information on how to determine the basis, refer to IRS Publication 551 Basis of Assets.8. The name and address of the donee.9. The social security numbers of the donor and the donor's spouse, if applicable. If trust property or property transferred in trust is reported on the return, you will need the tax identification number or EIN for the trust.10. Information on gifts made during prior tax years. It may be necessary to refer to previously filed gift tax returns to complete a return for a new tax year.11. Information on gift tax and generation skipping tax or GSTT that may apply.12. Information on any other taxes paid.13. Information on any gifts to trusts. See types of trusts.14. If the gift involves a trust, information on the terms of the trust or a certified copy of the trust documents. See Certification of Trust.15. For
life insurance policies, the name of the insurer, the policy number, and other information on the policy.
This article discusses the federal gift tax return requirements in the United States. It provides only a broad, general overview of select portions of the gift tax rules in the U.S. The information discussed on this page does not apply to any state, municipal, local or other taxes of any kind. This article is not legal, financial or tax advice. It is intended for educational purposes only. For a list of additional resources on the federal gift tax and GST tax, review our Estate Tax Books page.Published by Pennyborn.com on August 16, 2018. Copyright Pennyborn.com. ALL RIGHTS RESERVED.
Who Has to File a Gift Tax Return?
When reviewing requirements for gift tax returns, it is important to understand the terminology used on tax forms. The person that gives the gift is called the donor. The person that receives the gift is called the donee. The donor is responsible to pay any gift tax owed. If a donor makes a gift that is required to be reported on a gift tax return but dies without having filed one, the executor or administrator of the decedent's estate is responsible for filing the tax return. See executor checklist.Although it is the donor's responsibility to pay the gift tax, if it is not paid, the donee may be required to pay it. Prior to accepting a gift, the donee may want to talk with the donor about how any tax returns and tax payments related to the gift will be handled. See inheritances. The donee may also need documentation from the donor for tax purposes.When reviewing the requirements for filing a federal gift tax return, be aware there are several types of transfers you may think of as gifts that are not subject to gift tax. For example, certain payments that qualify for the medical or educational exclusion are not reported on IRS Form 709. But payments by a donor for medical or educational expenses that do not fall within the medical or educational exemption are treated as gifts to the person on whose behalf such payments were made. Also, transfers to certain exempt organizations and political organizations are not reported on a gift tax return. If you made gifts to qualified charities and want to deduct those gifts, consult a tax professional about the charitable deduction and refer to our page on charitable giving.Individuals that are nonresidents of the United States and are not U.S. citizens may need to be aware of gift tax requirements regarding property located in the United States. When gifts of tangible property situated in the U.S. are made by nonresident noncitizens, these gifts are subject to federal gift and GST taxes. These taxes may also apply to gifts of intangible property by nonresident noncitizens in certain circumstances.The federal gift tax rules are complex. Tax laws and regulations change frequently. Consult your tax preparer or estate planning attorney about whether you need to file a return. A gift tax return may be required even when no tax is owed. Related: Estate Taxes.
When Are Gift Tax Returns Due?
The deadline to file a federal gift tax return is typically by April 15 in the year after the year in which the transfer was made. For example, if you make a reportable gift on December 25, 2018, the gift tax return would typically need to be filed no later than April 15, 2019. If you are the executor of a decedent's estate and a gift tax return is due for gifts made by the deceased, the due date would generally be whichever of the following dates comes first: the same date decedent's estate tax return is due or April 15 of the year after the year in which the gift was made.Note: Tax day in the U.S. is not always April 15. If April 15 falls on a weekend or on an observed federal holiday, the due date for filing gift tax returns may be on the next business day after April 15. Visit the IRS website to confirm the due date for gift tax returns for the applicable tax year.
Gift Tax Return Forms
You can get a copy of the form used to file a gift tax return on the IRS website. The form you will need is IRS Form 709 United States Gift and Generation Skipping Transfer Tax Return. Refer to the IRS Instructions for Form 709 for the applicable tax year. The Instructions for Form 709 list the current mailing address and procedures for filing a U.S. gift tax return. Consult a CPA or other tax professional about which gifts should be listed on each part of Form 709 and the amount of gift or GST tax owed.Form 709 is also used to report gifts subject to GST tax, including certain gifts to trusts.Related forms: IRS Form 706, United States Estate and Generation Skipping Transfer Tax Return.
Key Points About Gift Tax Returns
Here are some things you should know about U.S. gift tax returns:1. You may be required to file a gift tax return even when no tax is owed. For example, a gift that is within an exemption may nevertheless need to be reported.2. IRS Form 709 is also used to report a donor's transfers for purposes of the generation skipping transfer tax exemption.3. For spouses to use gift splitting, a gift tax return must be filed. Several requirements must be met to take advantage of gift splitting.4. Spouses may not file a joint gift tax return. If you and your spouse are filing two individual gift tax returns, ask your tax preparer how to submit them to the IRS together.5. If your spouse is not a U.S. citizen and you give your spouse a gift, certain limits and gift tax rules may apply.6. There are many examples of types of transfers for which a gift tax return may be required. It may not be something you think of as a gift. For example, if you loaned money to a relative or friend without charging interest at current market rates or you forgave a debt that was owed to you, you may be required to pay gift tax.7. There are exceptions for certain types of gifts, payments, etc. Experience with U.S. tax laws and procedures is required to determine whether something must be reported on a tax form. Therefore, only a qualified tax professional can advise how to properly complete your gift tax return.8. You can expect to pay an additional fee to your tax preparer for each gift tax return you have to file.9. Failure to file a gift tax return when due and failure to pay gift tax when due can result in penalties. Also, entering a value for the gifted property that is lower than the actual value can result in penalties.10. Spouses that receive a qualified terminal interest from their spouse, such as a life estate or life income interest, should consult a tax professional about any gift tax and generation skipping transfer tax that may be owed.11. If you overpaid taxes owed on your IRS Form 1040, the amount of such overpayment may not be used to offset taxes owed on IRS Form 709.12. When completing a gift tax return, be aware that some gifts are subject to gift tax only, some gifts are subject to gift and GST tax, while other gifts may only be subject to gift tax initially, but could be subject to GST tax as well in the future. With regard to gifts in trust, GST tax may apply when distributions are made to beneficiaries, when you
terminate a trust, and in some circumstances, the tax could apply in both instances.13. Donors that have a spouse that has died may be able to use the amount of the deceased spouse's unused exclusion, if certain requirements are met. If the executor of the deceased spouse's estate made an election to allow for transfer or portability of the unused exclusion amount, the surviving spouse can potentially use that amount. This option is not available to surviving spouses that are nonresident noncitizens of the U.S.14. If you made contributions to a Qualified Tuition Plan in excess of the annual gift tax exclusion amount, consult a tax professional about certain elections that may be available on your gift tax return. Related: College Funds.15. GST tax may apply to trusts as well as arrangements that are not actual trusts but have substantially the same effect as trusts. Examples include annuities and life estates with remainders.16. One reason to file a gift tax return is to start the statute of limitations period with the IRS. This can be important for those seeking to limit tax liability.This is not a complete list of issues to consider when making or reporting gifts or transfers that may be subject to the U.S. gift and GST tax. Consult a tax advisor and an estate planning attorney about any plans you have to make transfers that may be subject to these taxes.
INFORMATION ON THIS SITE, INCLUDING ARTICLES, ESTATE PLANNING FORMS, AND THE ESTATE PLANNING BLOG, DOES NOT CONSTITUTE LEGAL, FINANCIAL OR TAX ADVICE. Pennyborn.com is not a law firm and is not a substitute for a lawyer. Your use of this site does not create an attorney-client relationship. Information on this site is for educational purposes only and may not be accurate, complete or up to date.
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