The IRS 709 form, also known as the United States Gift (and Generation-Skipping Transfer) Tax Return, is a document used to report the transfer of money or property to another person without receiving something of at least equal value in return. This form is essential for documenting any gifts that exceed the annual exclusion limit and may have implications for both the giver and the receiver's tax responsibilities. If you need to file a Form 709, understanding its requirements and accurately completing it is crucial; to start the process, simply click the button below.
Delving into the realm of tax forms and regulations, one encounters various documents, each serving a unique purpose in the maintenance of orderly financial affairs. Among these, the IRS 709 form emerges as a critical document for individuals engaging in the practice of gifting significant assets. The essence of this form lies in its role as a United States Gift (and Generation-Skipping Transfer) Tax Return, necessitating its use when an individual gives gifts exceeding the annual exclusion limit set by the IRS. It's not merely a formality; it's a crucial step in ensuring compliance with tax laws, potentially saving filers from pitfalls associated with gift taxes. Understanding the nuances of form 709 requires a thorough exploration of its components, such as eligibility, the categorization of gifts, the intricacies of deductions, and how these elements interplay with the broader spectrum of an individual's tax obligations. From the surface, it might seem daunting, yet with guidance, filers can navigate the complexities of IRS 709, harnessing its provisions to effectively manage their gifting strategies while adhering to tax regulations.
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 for reporting United States Gift (and Generation-Skipping Transfer) Taxes is an essential step for individuals who have given gifts that exceed the annual exclusion amount. This task might appear daunting at first, but breaking it down into manageable steps can simplify the process. Correctly completing and submitting this form ensures compliance with federal tax obligations and helps avoid potential penalties. The key is to approach this methodically, ensuring that all relevant gifts are accurately reported and any applicable taxes are calculated correctly. Follow these steps to navigate the process smoothly.
Completing the IRS Form 709 is a thorough process, but meticulous attention to detail ensures that your gift tax obligations are accurately met. Affording the time to carefully document each gift and its corresponding details can prevent misunderstandings and promote peace of mind knowing that everything is properly reported. As tax laws and exclusions may change, always refer to the most current form and instructions or consult with a tax professional for guidance tailored to your specific situation.
Form 709, known as the United States Gift (and Generation-Skipping Transfer) Tax Return, is a document filed by individuals to report gifts that exceed the annual exclusion limit set by the IRS. This form is crucial for documenting substantial monetary or asset gifts given to another person that don't fall into the category of tax-free transactions.
Any individual who gives gifts that cumulatively exceed the annual gift tax exclusion amount for a given year is required to file Form 709. It's important to note that this requirement applies to the giver of the gift, not the recipient. Moreover, certain transfers to trusts and gifts split between spouses might also necessitate filing this form.
The annual exclusion limit refers to the amount an individual can give to each recipient within a single year without the need to file Form 709. This limit is subject to change from year to year based on IRS regulations. For specific, up-to-date figures, checking the official IRS website or consulting with a tax professional is recommended.
Yes, there are certain types of gifts that do not require reporting on Form 709, including:
Spousal gifts can have several effects on Form 709 filing requirements. Gifts to one’s spouse are generally not taxable and do not require reporting if the spouse is a U.S. citizen. However, there is a limit on the amount of tax-free gifts that can be made to a non-U.S. citizen spouse before needing to file Form 709. Understanding these distinctions is crucial for compliance.
The deadline for filing Form 709 is typically April 15 of the year following the year in which the gift(s) were made. If additional time is needed, an extension for filing the form can be requested. However, it's important to consider that an extension to file does not extend the time to pay any gift tax due.
As of the last available information, Form 709 must be filed on paper and mailed to the IRS. The IRS accepts electronic filing for many forms, but Form 709 is not yet among them. Always check the latest IRS updates, as policies and procedures can change.
Failure to file Form 709 when required can result in penalties and interest on any gift tax owed. The penalty for late filing is usually a percentage of the tax owed. Additionally, not filing this form can also complicate future estate planning and settlement. It's highly advisable to file the required form timely to avoid these complications.
Filling out the IRS 709 form, which is used to report gifts that exceed the annual exclusion limit, can be tricky. It's common for people to make mistakes when they're navigating this detailed form. Being aware of these errors can help to ensure the gift tax return is completed accurately.
Not understanding what needs to be reported: Many people are not aware that the IRS requires reporting for any gifts that exceed the annual exclusion amount. This misunderstanding can lead to failing to file the form when it's actually needed.
Forgetting to include previous gifts: The form requires information about prior gifts because it affects your lifetime gift and estate tax exemption. Overlooking past gifts can inaccurately reflect your exemption usage.
Miscalculating the value of a gift: Determining the fair market value of a gift, especially if it's not cash, can be complex. Incorrectly valuing a gift can lead to incorrect tax implications.
Not utilizing the annual exclusion properly: There is an annual exclusion amount that allows you to give a certain value tax-free to as many people as you like each year. Some people fail to apply this exclusion to their advantage by either not knowing about it or misunderstanding how it works.
Leaving sections blank: Every question on the form needs an answer. Leaving sections blank because they seem irrelevant or out of confusion can cause unnecessary processing delays or even lead to penalties.
Incorrectly splitting gifts with a spouse: Married couples can combine their annual exclusions to double the amount they can give tax-free. However, this requires properly indicating on the form that gifts are being split. Failing to do so accurately can lead to reporting errors.
Being mindful of these common pitfalls can help make the task of filling out the IRS 709 form less daunting and more accurate. If ever in doubt, seeking advice from a tax professional is always a wise choice to ensure compliance with IRS rules and regulations.
When dealing with the IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, individuals often find it integral to familiarize themselves with a variety of other documents. These documents, ranging from instructions for filing to complementary forms, play crucial roles in ensuring accurate reporting and compliance with federal tax obligations associated with gifts or generation-skipping transfers. Below is a comprehensive list of documents typically used alongside Form 709.
Each of these documents serves a specific purpose, either directly supporting the preparation and filing of Form 709 or providing critical tax information that may influence the process. Proper understanding and utilization of these forms can greatly assist individuals in navigating the complexities of tax law regarding gifts, estates, and generation-skipping transfers. It's always advisable to seek professional guidance to ensure compliance and optimize tax outcomes.
IRS Form 1040: Just like the IRS 709 form, which is used for reporting gifts above the annual exclusion, Form 1040 is used by individuals to file their annual income tax returns. Both forms are essential for complying with U.S. tax laws and involve reporting financial information to the IRS.
IRS Form 706: This form is for the United States Estate (and Generation-Skipping Transfer) Tax Return, similar to the 709 form in that it deals with the transfer of assets, but in this case, at death rather than during life. Both forms require detailed financial disclosures and calculations based on current tax laws.
IRS Form 1041: Serving as the U.S. Income Tax Return for Estates and Trusts, Form 1041 is similar to Form 709 since both involve the management of assets that could affect inheritance or gifts. Each requires an understanding of how transfers impact financial obligations to the government.
IRS Schedule D (Form 1040): This form is used to report capital gains and losses, which, like the 709 form, affects an individual's tax liability based on the transfer and valuation of property. Both forms play a crucial role in calculating taxes owed or refunds due.
IRS Form 8822: Form 8822, used for reporting a change of address, shares a procedural similarity with the 709 form in that both are used to update personal information with the IRS to ensure that taxpayers remain in compliance with reporting requirements.
IRS Form 941: Employers use Form 941 to report federal income and FICA taxes withheld from employees' paychecks. Similar to the 709, it deals with the reporting of financial information critical for tax purposes, although 941 focuses on employment rather than gifts.
IRS Form 990: Filed by non-profit organizations, Form 990 provides the IRS with information about the organization's operations, including its finances. Like the 709 form, it ensures transparency in financial activities but from a corporate rather than an individual perspective.
IRS Form W-2: This wage and tax statement, issued by employers, is crucial for individuals to file their income tax returns. Similar to Form 709, Form W-2 involves the disclosure of financial information that is necessary for the accurate calculation of tax obligations.
IRS Form 4506-T: Used to request tax return transcripts, this form, like the 709, involves the retrieval and use of past financial data to support current financial or legal decisions, ensuring compliance with or understanding of tax requirements.
IRS Form 2555: By reporting foreign earned income, Form 2555, like the 709, allows for specific exemptions and the accurate reporting of financial information affecting tax liabilities, highlighting international aspects of tax law compliance.
Filling out the IRS Form 709, also known as the United States Gift (and Generation-Skipping Transfer) Tax Return, can be a straightforward process when done carefully. This document is essential for reporting gifts above the annual exclusion amount to the Internal Revenue Service. Whether you're a first-timer or looking for a refresher, following these dos and don'ts will help ensure your form is complete, accurate, and compliant.
Dos:
Don'ts:
By keeping these guidelines in mind, you'll be well on your way to successfully navigating the complexities of the IRS Form 709. Remember, when in doubt, seeking advice from a tax professional can provide clarity and peace of mind.
When it comes to financial matters and gift-giving, the IRS Form 709, or the United States Gift (and Generation-Skipping Transfer) Tax Return, often comes into play. However, there are quite a few misconceptions surrounding this form that can lead to confusion. Here's a look at ten common misconceptions and the truth behind them:
It's crucial to understand the specifics surrounding the IRS Form 709, as misinterpreting the rules can lead to unintentional misfilings or even penalties. Proper knowledge ensures that you remain compliant while taking full advantage of tax laws related to gift-giving.
When dealing with the Internal Revenue Service (IRS) Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, individuals must understand several key points. This document is essential for reporting gifts that exceed the annual exclusion limit, ensuring compliance with federal tax obligations. Here are seven crucial takeaways for properly filling out and utilizing Form 709:
Properly completing and submitting the IRS Form 709 is vital for individuals making significant gifts. Awareness of these key points can assist in navigating the complexities of the gift tax system, ensuring compliance and making informed decisions about gift-giving strategies.
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