The IRS Form 709 is a document used by individuals to report transfers of money or property as gifts that exceed the annual exclusion limit, which requires them to file this form with their tax return. It plays a critical role in managing potential tax liabilities associated with these gifts, ensuring that individuals comply with U.S. tax laws. For detailed guidance on how to fill out this form correctly, click the button below.
As individuals seek to manage their financial legacy, understanding the nuances of transferring wealth without unnecessary taxation becomes paramount. This is where the IRS 709 form plays a crucial role, acting as a guidepost for those navigating the complex landscape of gifting assets. Designed by the Internal Revenue Service, this document is essential for anyone making gifts above the annual exclusion amount, thus requiring a meticulous approach to its completion. It not only helps in tracking the lifetime gift tax exemption but also in calculating any taxes due from gifting assets. The IRS 709 form, therefore, becomes an indispensable tool for financial planning, ensuring that gifts to loved ones are made in the most tax-efficient manner. With its importance stretching across various financial planning domains, comprehending its proper use and the implications of its entries ensures that individuals can pass on their wealth while minimizing their tax burden, thereby fostering a prudent approach to financial gift-giving.
Form 709
United States Gift (and Generation-Skipping Transfer) Tax Return
OMB No. 1545-0020
▶ Go to www.irs.gov/Form709 for instructions and the latest information.
2021
Department of the Treasury
(For gifts made during calendar year 2021)
▶ See instructions.
Internal Revenue Service
1 Donor’s first name
and middle initial
2 Donor’s last name
3 Donor’s social security number
4 Address (number, street, and apartment number)
5 Legal residence (domicile)
6 City or town, state or province, country, and ZIP or foreign postal code
7 Citizenship (see instructions)
Information
8
If the donor died during the year, check here ▶
and enter date of death
,
.
Yes
No
9
If you extended the time to file this Form 709, check here ▶
10
Enter the total number of donees listed on Schedule A. Count each person only once ▶
11a
Have you (the donor) previously filed a Form 709 (or 709-A) for any other year? If “No,” skip line 11b
b
Has your address changed since you last filed Form 709 (or 709-A)?
. . . . . . . . . . . . . . . .
1—General
12
Gifts by husband or wife to third parties. Do you consent to have the gifts (including generation-skipping transfers) made
by you and by your spouse to third parties during the calendar year considered as made one-half by each of you? (See
instructions.) (If the answer is “Yes,” the following information must be furnished and your spouse must sign the consent
shown below. If the answer is “No,” skip lines 13–18.)
Part
13
Name of consenting spouse
14 SSN
15
Were you married to one another during the entire calendar year? See instructions
16
If line 15 is “No,” check whether
married
divorced or
widowed/deceased, and give date. See instructions ▶
17
Will a gift tax return for this year be filed by your spouse? If “Yes,” mail both returns in the same envelope
18Consent of Spouse. I consent to have the gifts (and generation-skipping transfers) made by me and by my spouse to third parties during the calendar year considered as made one-half by each of us. We are both aware of the joint and several liability for tax created by the execution of this consent.
Consenting spouse’s signature ▶
Date ▶
19Have you applied a DSUE amount received from a predeceased spouse to a gift or gifts reported on this or a previous Form
709? If “Yes,” complete Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Enter the amount from Schedule A, Part 4, line 11
. . .
2
Enter the amount from Schedule B, line 3
3
Total taxable gifts. Add lines 1 and 2
4
Tax computed on amount on line 3 (see Table for Computing Gift Tax in instructions) . . .
5
Tax computed on amount on line 2 (see Table for Computing Gift Tax in instructions) . . .
Computation
6
Balance. Subtract line 5 from line 4
7
Applicable credit amount. If donor has DSUE amount from predeceased spouse(s) or Restored Exclusion
Amount, enter amount from Schedule C, line 5; otherwise, see instructions
Enter the applicable credit against tax allowable for all prior periods (from Sch. B, line 1, col. C)
Balance. Subtract line 8 from line 7. Do not enter less than zero
Enter 20% (0.20) of the amount allowed as a specific exemption for gifts made after September 8, 1976,
2—Tax
and before January 1, 1977. See instructions
11
Balance. Subtract line 10 from line 9. Do not enter less than zero
Applicable credit. Enter the smaller of line 6 or line 11
Credit for foreign gift taxes (see instructions)
14
Total credits. Add lines 12 and 13
Balance. Subtract line 14 from line 6. Do not enter less than zero
here.
Generation-skipping transfer taxes (from Schedule D, Part 3, col. G, total)
Total tax. Add lines 15 and 16
order
18
Gift and generation-skipping transfer taxes prepaid with extension of time to file
19
If line 18 is less than line 17, enter balance due. See instructions
money
20
If line 18 is greater than line 17, enter amount to be refunded
Under penalties of perjury, I declare that I have examined this return, including any accompanying schedules and statements, and to the best of my
knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than donor) is based on all information of which preparer has
Sign
any knowledge.
or
May the IRS discuss this return
Here
with the preparer shown below?
check
▲
See instructions. Yes
Signature of donor
Date
Attach
Paid
Print/Type preparer’s name
Preparer’s signature
Check
if
PTIN
Preparer
self-employed
Firm’s name ▶
Firm’s EIN ▶
Use Only
Firm’s address ▶
Phone no.
For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see the instructions for this form.
Cat. No. 16783M
Form 709 (2021)
Page 2
SCHEDULE A
Computation of Taxable Gifts (Including transfers in trust) (see instructions)
A Does the value of any item listed on Schedule A reflect any valuation discount? If “Yes,” attach explanation . . . . . . Yes
B
◀Check here if you elect under section 529(c)(2)(B) to treat any contributions made this year to a qualified tuition program as made ratably over a 5-year period beginning this year. See instructions. Attach explanation.
Part 1—Gifts Subject Only to Gift Tax. Gifts less political organization, medical, and educational exclusions. See instructions.
A
C
D
E
F
G
H
Item
• Donee’s name and address
Donor’s adjusted
Value at
For split gifts,
Net transfer
number
• Relationship to donor (if any)
basis of gift
of gift
date of gift
enter 1/2 of
(subtract col. G
• Description of gift
column F
from col. F)
• If the gift was of securities, give CUSIP no.
• If closely held entity, give EIN
Gifts made by spouse—complete only if you are splitting gifts with your spouse and he/she also made gifts.
Total of Part 1. Add amounts from Part 1, column H . . . . . . . . . . . . . . . . . . . . . . ▶
Part 2—Direct Skips. Gifts that are direct skips and are subject to both gift tax and generation-skipping transfer tax. You must list the gifts in chronological order.
2632(b)
election
out
Total of Part 2. Add amounts from Part 2, column H
. . . ▶
Part 3—Indirect Skips and Other Transfers in Trust. Gifts to trusts that are indirect skips as defined under section 2632(c) or to trusts that are currently subject to gift tax and may later be subject to generation-skipping transfer tax. You must list these gifts in chronological order.
2632(c)
Total of Part 3. Add amounts from Part 3, column H
▶
(If more space is needed, attach additional statements.)
Page 3
Part 4—Taxable Gift Reconciliation
Total value of gifts of donor. Add totals from column H of Parts 1, 2, and 3
Total annual exclusions for gifts listed on line 1 (see instructions)
Total included amount of gifts. Subtract line 2 from line 1
Deductions (see instructions)
4Gifts of interests to spouse for which a marital deduction will be claimed, based on item
numbers
of Schedule A
Exclusions attributable to gifts on line 4 . .
. . . . . . . . . . . .
Marital deduction. Subtract line 5 from line 4 .
Charitable deduction, based on item numbers
less exclusions
Total deductions. Add lines 6 and 7 . . .
. . . . . . . .
Subtract line 8 from line 3
Generation-skipping transfer taxes payable with this Form 709 (from Schedule D, Part 3, col. G, total) . . . .
Taxable gifts. Add lines 9 and 10. Enter here and on page 1, Part 2—Tax Computation, line 1
Terminable Interest (QTIP) Marital Deduction. (See instructions for Schedule A, Part 4, line 4.)
If a trust (or other property) meets the requirements of qualified terminable interest property under section 2523(f), and: a. The trust (or other property) is listed on Schedule A; and
b. The value of the trust (or other property) is entered in whole or in part as a deduction on Schedule A, Part 4, line 4, then the donor shall be deemed to have made an election to have such trust (or other property) treated as qualified terminable interest property under section 2523(f).
If less than the entire value of the trust (or other property) that the donor has included in Parts 1 and 3 of Schedule A is entered as a deduction on line 4, the donor shall be considered to have made an election only as to a fraction of the trust (or other property). The numerator of this fraction is equal to the amount of the trust (or other property) deducted on Schedule A, Part 4, line 6. The denominator is equal to the total value of the trust (or other property) listed in Parts 1 and 3 of Schedule A.
If you make the QTIP election, the terminable interest property involved will be included in your spouse’s gross estate upon his or her death (section 2044). See instructions for line 4 of Schedule A. If your spouse disposes (by gift or otherwise) of all or part of the qualifying life income interest, he or she will be considered to have made a transfer of the entire property that is subject to the gift tax. See Transfer of Certain Life Estates Received From Spouse in the instructions.
12Election Out of QTIP Treatment of Annuities
◀ Check here if you elect under section 2523(f)(6) not to treat as qualified terminable interest property any joint and survivor annuities that are reported on Schedule A and would otherwise be treated as qualified terminable interest property under section 2523(f). See instructions. Enter the item numbers from Schedule A for the annuities for which you are making this election ▶
SCHEDULE B Gifts From Prior Periods
If you answered “Yes” on line 11a of page 1, Part 1, see the instructions for completing Schedule B. If you answered “No,” skip to the Tax Computation on page 1 (or Schedule C or D, if applicable). Complete Schedule A before beginning Schedule B. See instructions for recalculation of the column C amounts. Attach calculations.
Calendar year or calendar quarter (see instructions)
Internal Revenue office
where prior return was filed
Amount of applicable
Amount of specific
credit (unified credit)
exemption for prior
against gift tax
periods ending before
for periods after
January 1, 1977
December 31, 1976
Amount of
taxable gifts
Totals for prior periods
Amount, if any, by which total specific exemption, line 1, column D, is more than $30,000
. . . . . . .
3Total amount of taxable gifts for prior periods. Add amount on line 1, column E, and amount, if any, on line 2. Enter
here and on page 1, Part 2—Tax Computation, line 2
Page 4
SCHEDULE C Deceased Spousal Unused Exclusion (DSUE) Amount and Restored Exclusion
Provide the following information to determine the DSUE amount and applicable credit received from prior spouses. Complete Schedule A before beginning Schedule C.
Name of deceased spouse
Date of death
Portability election
If “Yes,” DSUE
DSUE amount applied
Date of gift(s)
(dates of death after December 31, 2010, only)
made?
amount received
by donor to lifetime
(enter as mm/dd/yy
from spouse
gifts (list current
for Part 1 and as
and prior gifts)
yyyy for Part 2)
Part 1—DSUE RECEIVED FROM LAST DECEASED SPOUSE
Part 2—DSUE RECEIVED FROM PREDECEASED SPOUSE(S)
TOTAL (for all DSUE amounts applied from column E for Part 1 and Part 2) . . . . . . . . . ▶
Donor’s basic exclusion amount (see instructions)
Total from column E, Parts 1 and 2
Restored Exclusion Amount (see instructions)
Add lines 1, 2, and 3
5Applicable credit on amount in line 4 (see Table for Computing Gift Tax in the instructions). Enter here and on line 7,
Part 2—Tax Computation . . . . . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE D Computation of Generation-Skipping Transfer Tax
Note: Inter vivos direct skips that are completely excluded by the GST exemption must still be fully reported (including value and exemptions claimed) on Schedule D.
Part 1—Generation-Skipping Transfers. List items from Schedule A first, then items to be reported on Schedule D, including any transfers subject to an Estate Tax Inclusion Period (ETIP).
Item number
Description
Value
Nontaxable
(from Schedule A,
(only for ETIP transfers)
portion of transfer
(subtract col. D
Part 2, col. A, then
Part 2, col. H,
from col. C)
ETIP transfers,
or close of ETIP
if any)
described in col. B)
Gifts made by spouse (for gift splitting only)
Page 5
Part 2—GST Exemption Reconciliation (Section 2631) and Section 2652(a)(3) Election
Check here ▶
if you are making a section 2652(a)(3) (special QTIP) election. See instructions.
Enter the item numbers from Schedule A of the gifts for which you are making this election ▶
Maximum allowable exemption (see instructions)
. . . . . . . . . . . . . . . . . . .
Total exemption used for periods before filing this return
Exemption available for this return. Subtract line 2 from line 1
Exemption claimed on this return from Part 3, column C, total below
5Automatic allocation of exemption to transfers reported on Schedule A, Part 3. To opt out of the automatic
allocation rules, you must attach an “Election Out” statement. See instructions
6Exemption allocated to transfers not shown on line 4 or line 5 above. You must attach a “Notice of Allocation.”
See instructions
Add lines 4, 5, and 6
Exemption available for future transfers. Subtract line 7 from line 3
Part 3—Tax Computation
GST exemption
Divide col. C
Inclusion ratio
Applicable rate
Generation-skipping
(from Schedule D,
allocated
by col. B
(Subtract col. D
(multiply col. E
transfer tax
Part 1)
Part 1, col. E)
from 1.000)
by 40% (0.40))
(multiply col. B
by col. F)
Total exemption claimed. Enter here
Total generation-skipping transfer tax. Enter here; on page
and on Part 2, line 4, above. May not
3, Schedule A, Part 4, line 10; and on page 1, Part 2—Tax
exceed Part 2, line 3, above . . .
Computation, line 16
Filling out the IRS Form 709 is a necessary step for individuals who have given gifts above the annual exclusion amount and need to report these transactions to the Internal Revenue Service (IRS). While this may seem daunting at first, understanding each section and taking the form step by step can make the process much smoother. The key is to gather all the necessary information about the gifts before starting, including dates, values, and recipient details. This will streamline the completion of the form. Below are the steps needed to properly fill out the IRS Form 709.
With careful attention to detail and a clear understanding of the requirements, completing the IRS Form 709 can be a straightforward process. Remember, accurate reporting is crucial to avoid any potential issues with the IRS. Should you feel unsure at any stage, consulting with a tax professional can provide additional clarity and guidance.
What is the IRS 709 form?
The IRS 709 form, officially titled the United States Gift (and Generation-Skipping Transfer) Tax Return, is used to report gifts that exceed the annual tax-free gift limit. Individuals must file this form to report large gifts or transfers to another person where the giver receives nothing or less than full value in return. It's a way for the IRS to track gifts that might affect taxation, especially in terms of estate planning.
When is the IRS 709 form due?
The deadline for filing Form 709 is April 15 of the year following the gift. If this date falls on a weekend or public holiday, the due date is moved to the next business day. An extension can be requested if more time is needed, aligning the due date with the extended deadline for your federal income tax return.
What gifts need to be reported on Form 709?
Gifts that exceed the annual exclusion amount must be reported. For 2023, the annual exclusion is $16,000 per recipient. This means if you give any individual gifts valued over this amount, you are required to report them. However, gifts to one’s spouse, payments made directly to an educational institution for someone else’s tuition, or payments made directly to a healthcare provider for someone else’s medical care do not need to be reported.
Do I need to pay tax on gifts I report on Form 709?
Not necessarily. Filing Form 709 does not automatically mean you owe gift tax. You only owe tax if your combined lifetime gifts exceed the lifetime gift and estate tax exemption, which is $12.06 million for individuals in 2023. Until your gifts surpass this amount, you likely won't owe tax but are still required to file Form 709 to report gifts over the annual exclusion.
Can I file Form 709 electronically?
As of the latest updates, the IRS does not accept Form 709 filings electronically. You must mail your completed form to the IRS. Always check the IRS website or consult with a tax professional for the most current filing procedures, as this policy may change.
What information do I need to fill out Form 709?
To accurately complete Form 709, you'll need detailed information on each gift, including the date of the gift, the fair market value of the gift at the time it was given, the recipient's name, and your relationship to the recipient. Additionally, you should have your Social Security number and the applicable exclusion amounts handy to calculate whether any tax is owed after allowances and exclusions are applied.
Can I split gifts with my spouse to increase the annual exclusion?
Yes, spouses can choose to split gifts to effectively double the annual gift tax exclusion amount per recipient. This means married couples can gift up to $32,000 tax-free to any one individual in 2023. To elect gift splitting, both spouses must agree and file Form 709, even if only one spouse made the actual gift.
What happens if I don't file Form 709?
Failing to file Form 709 when required can result in penalties and interest on any unpaid taxes due. The penalty for late filing is usually small but can accumulate over time. Additionally, not filing can affect your lifetime gift and estate tax exemption. To ensure compliance with IRS requirements, it's crucial to file the form whenever you make gifts exceeding the annual exclusion amount.
When dealing with the IRS 709 form, which is used for reporting gifts that exceed the annual exclusion amount, individuals often make mistakes that can cause unnecessary headaches or even trigger audits. Recognizing and avoiding these common errors can save time and prevent potential issues with the IRS.
Not understanding what qualifies as a gift. Many people fail to realize that the IRS considers a wide range of transactions as gifts, from direct cash payments to loans given without interest or below the market rate. Misunderstanding what constitutes a gift can lead to underreporting.
Overlooking the annual exclusion. The IRS allows individuals to give gifts up to a certain amount to any number of people each year without needing to file a Form 709. However, gifts exceeding this exclusion limit need to be reported, and many forget or miscalculate this amount.
Incorrect calculation of split gifts. Married couples often choose to split gifts to take advantage of their combined annual exclusions or unified credit. This strategy requires both spouses to consent and file Form 709, yet mistakes in the calculation or paperwork can occur, leading to under or over-reporting.
Failing to include necessary documentation. For certain gifts, additional documentation is required when filing Form 709. This might include valuation reports for property or letters stating the gift is not repayable. Failure to include these documents can raise red flags with the IRS.
Mixing up gift and estate taxes. Though related, the rules governing gift taxes and estate taxes have important distinctions. Some individuals improperly report transactions related to estates on Form 709, or conversely, fail to realize that large lifetime gifts can affect the estate tax exemption amount at death.
Not filing for non-taxable gifts. Even if a gift does not result in a tax due, if it exceeds the annual exclusion, it must be reported. This requirement is often misunderstood or overlooked, leading people to mistakenly believe they don't need to file Form 709 for non-taxable gifts.
Incorrectly claiming deductions. Certain types of payments can be excluded from being considered as gifts, such as payments made directly to an educational institution for someone's tuition. Misinterpreting these rules can result in erroneous claims of deductions or exclusions.
Understanding and avoiding these mistakes are crucial for accurately completing and filing the IRS 709 form. Taking the time to double-check the form for these common errors can help ensure compliance with IRS regulations and avoid potential complications.
When dealing with the IRS Form 709, which is used for reporting gifts over the annual exclusion amount and generation-skipping transfers, individuals often find themselves needing additional documents to provide a complete and accurate filing. These documents help in substantiating the information provided on Form 709, ensuring compliance with tax regulations, and potentially aiding in planning for future tax liabilities. Below is a list of other forms and documents that are frequently used alongside IRS Form 709.
Understanding and gathering these documents can be essential for correctly filing IRS Form 709 and handling other related tax matters. It's always a good practice to consult with a tax professional to ensure that all necessary documentation is properly completed and submitted. This approach helps in avoiding any potential issues with the IRS and ensures the financial health of both the giver and the receiver of substantial gifts.
IRS Form 1040: This form, used for individual income tax returns, is similar to IRS Form 709 because both require detailed financial information from the taxpayer. While Form 1040 focuses on income, deductions, and credits to determine tax liability, Form 709 is specific to reporting gifts that exceed the annual exclusion limit, requiring the taxpayer to calculate potential taxes on those gifts.
IRS Form 706: United States Estate (and Generation-Skipping Transfer) Tax Return, is closely related to Form 709 in its focus on transfers of wealth. However, Form 706 is used to report estate transfers upon death, whereas Form 709 covers gifts made during the taxpayer's lifetime. Both forms share the purpose of ensuring the proper reporting and taxation of wealth transfers outside of regular income.
IRS Form 1041: The U.S. Income Tax Return for Estates and Trusts shares similarities with Form 709 through its accounting for distributions that might affect the transfer of wealth. Form 1041 is concerned with the taxation of income generated by an estate or trust, ensuring that any income distributed or held within these entities is reported. While Form 709 focuses on the transfer of wealth during one's lifetime without immediate tax implications, Form 1041 ensures that ongoing income from an estate or trust is properly taxed.
IRS Form 8283: Noncash Charitable Contributions, is akin to Form 709 in that both involve reporting items of value given without direct compensation. Form 8283 is used when a taxpayer donates property valued over a certain amount to a qualified organization and must detail the value of the contribution. Though the intent behind Form 8283 is charitable deduction rather than the transfer of wealth for tax purposes, both forms require careful valuation and reporting of what has been transferred.
IRS Form 8839: Qualified Adoption Expenses, shares a tax-specific reporting focus with Form 709, in this case, related to the adoption process. Form 8839 allows individuals to claim a tax credit for certain adoption expenses, necessitating detailed documentation of these expenses. Like Form 709, which deals with the financial aspects of gifting, Form 8839 handles the financial side of adopting, providing a mechanism for fiscal relief in the context of expanding a family.
Filling out the IRS Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return, can be a tricky process. Whether you're managing your own estate planning or helping someone else, it's crucial to approach this form with care. To guide you through the process, here are some essential do's and don'ts:
Do's:
Double-check all personal information, including your Social Security Number (SSN) and the SSN of the gift recipient, to ensure accuracy. Mistakes here can lead to processing delays or audits.
Report all taxable gifts, even if they fall below the annual exclusion amount, to maintain accuracy and transparency in your tax records. This includes cash gifts, stock options, or real estate transfers.
Make use of the annual exclusion amount, which allows you to give gifts up to a certain amount (adjusted annually for inflation) to as many people as you wish without having to pay gift tax or even file Form 709.
Consider splitting gifts with your spouse to effectively double the annual exclusion amount available to you. This requires both spouses to consent and sign the return, allowing for larger amounts to be gift without incurring taxes.
Keep detailed records of all gifts made throughout the year. Documentation should include the value of the gift, recipient's information, and the date the gift was made. This is crucial for accurate filing and future reference.
Don'ts:
Don't overlook gifts that are not immediately obvious as taxable, such as interest-free loans to family members or contributions to a non-citizen spouse's living expenses. These can also be subject to gift tax rules.
Don't forget to file Form 709 by the tax deadline (typically April 15 of the year following the gift) to avoid penalties and interest. If more time is needed, you can request an extension.
Don't try to undervalue gifts to minimize taxes. The IRS has methods for valuing various types of gifts, and discrepancies can lead to audits and penalties.
Don't ignore the lifetime exemption limit, which is the total amount you can give over your lifetime without incurring gift taxes. Keep track of this to avoid unexpected tax liabilities.
Don't attempt to navigate complex gifting strategies without consulting a tax professional. The laws and regulations surrounding gift taxes can be complicated, and professional advice is invaluable in avoiding mistakes.
Filing taxes can be daunting, and when it comes to gift taxes and the IRS Form 709, misconceptions are all too common. Let's unwrap some of these misunderstandings and shed light on the facts, making the process less intimidating.
Understanding the specifics of the IRS Form 709 can demystify the process and ensure that you are both compliant and making the most of your gifting strategies. When in doubt, consulting with a tax professional can provide personalized guidance tailored to your situation.
Filing the IRS 709 form, officially known as the United States Gift (and Generation-Skipping Transfer) Tax Return, is a necessity for many individuals every year. It documents the transfer of wealth in the form of gifts that may be subject to tax. Understanding the key aspects of this form can lead to more informed financial planning and tax compliance. Below are eight important takeaways regarding the IRS 709 form.
Filing the IRS 709 form can be a complex process, but understanding these key facets can demystify the requirements and help individuals navigate their tax obligations more confidently. When in doubt, consulting with a tax professional is always a prudent course of action to ensure compliance and optimize tax strategy.
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