The IRS 709 form is a United States Federal Tax form used to report transfers of property or money to others where the donor receives nothing, or less than full value, in return. It plays a crucial role in managing gift taxes and estate planning. For guidance on how to complete and submit this important document, click the button below.
Navigating the world of taxes can often feel like trying to find your way through a maze, especially when it comes to gifts and transferring wealth. That's where the IRS Form 709 comes into play, playing a pivotal role for anyone who has given gifts that exceed the annual exclusion limit. This form is the key to ensuring that you're compliant with the United States gift and generation-skipping transfer taxes. Essentially, it's a way to report significant gifts to the IRS, ensuring that everything is above board. The form isn't just for reporting purposes; it also has implications for your lifetime exclusion limit and can affect your taxes. Whether you've given a large financial gift to a family member, contributed towards someone's tuition, or transferred property, understanding the IRS Form 709 is crucial. It's not only about following the rules but also about strategic financial planning and making the most of your gift tax exclusion.
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
Upon deciding to transfer gifts that exceed the annual exclusion limit, individuals must navigate the IRS 709 form, which serves as a declaration of their generosity. This process can be intricate, as it involves detailed disclosures concerning the giver and recipient, as well as the nature and valuation of the gift itself. Successfully submitting a complete and accurate form is crucial, not only for compliance with tax regulations but to ensure that the full narrative of one's financial generosity is accurately recorded. Following a systematic approach to filling out the form can alleviate much of the potential confusion and reduce the likelihood of errors.
Accurately completing the IRS 709 form is a foundational step for those who have generously exceeded the gift tax exclusion. While the process may seem daunting at first, breaking it down into manageable steps can significantly streamline the completion. Ensuring that each section is filled out with precision and care not only complies with federal requirements but also accurately reflects the giver's intentions and the nature of their generosity. Patience and attention to detail are key in navigating this form successfully.
What is the IRS Form 709?
IRS Form 709 is the United States Gift (and Generation-Skipping Transfer) Tax Return. It is a form that individuals use to report the transfer of gifts that exceed the annual exclusion limit. This form helps the IRS track the utilization of an individual's lifetime gift and estate tax exclusion.
Who needs to file IRS Form 709?
Any individual who gives gifts in excess of the annual exclusion amount to a single recipient in a given year needs to file Form 709. This requirement applies regardless of whether the donor owes tax on the gift because of the lifetime exemption.
What is the annual exclusion for IRS Form 709?
The annual exclusion amount is the limit up to which gifts can be given to each recipient in a single year without needing to file Form 709 or pay any gift tax. This amount can change from year to year based on inflation adjustments. For the most current exclusion amount, it's advisable to consult the IRS website or a tax professional.
Are there any gifts that are exempt from being reported on Form 709?
Yes, some gifts do not require reporting on Form 709. These include tuition or medical expenses paid directly to the institution, gifts to one's spouse, gifts to political organizations, and gifts valued at or below the annual exclusion limit.
What happens if you don’t file Form 709?
Failing to file Form 709 when required can lead to penalties and interest charges on any tax owed. The IRS may also impose other sanctions. It is important to file the form even if no tax is due, to avoid potential penalties and to properly apply the gift against the lifetime exemption.
How does filing Form 709 affect my lifetime exemption?
When you file Form 709 and report a gift above the annual exclusion, the IRS reduces your lifetime gift and estate tax exemption by the amount of the gift. This is because the reported gift is applied against your lifetime exemption to determine if any gift tax is owed.
Can married couples file a joint IRS Form 709?
No, there is no joint Form 709. Each spouse must file their own form if they both have made gifts that exceed the annual exclusion amount. However, spouses can choose to split gifts to effectively double the annual exclusion amount for gifts made to the same recipient.
When is IRS Form 709 due?
IRS Form 709 is typically due on April 15 of the year following the year in which the gifts were made. If the due date falls on a weekend or a legal holiday, the form is due on the next business day. Extensions to file Form 709 can be requested if more time is needed.
Where can I find IRS Form 709 and its instructions?
IRS Form 709 and the accompanying instructions can be found on the official website of the Internal Revenue Service (www.irs.gov). They can be downloaded for free. It's recommended to review the instructions carefully or consult with a tax professional when preparing to file Form 709.
Filing the IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, can sometimes be a tricky process. People often overlook key details or misunderstand the instructions, leading to common mistakes. It's crucial to fill out this form accurately to avoid potential issues with the IRS. Here are ten mistakes frequently made on the IRS 709 form.
One common error is not realizing when a gift needs to be reported. Many individuals don't understand that current tax laws require reporting gifts that exceed the annual exclusion amount. This amount is subject to change, so it's important to stay informed about the current threshold.
Another mistake is incorrectly calculating the value of a gift. For the IRS 709 form, the fair market value of the gift on the date of transfer is what should be reported. This means the price that the gift would sell for on the open market, not necessarily what was paid for it or what the giver thinks it's worth.
A common slip-up is failing to account for the annual exclusion. Each year, you're allowed to give a certain amount to as many people as you like without it counting against your lifetime exemption — but this exclusion must be applied correctly on the form to avoid overstating the taxable amount.
Some filers omit information about previous gifts. This can lead to discrepancies and potential audits since the IRS tracks gifts over an individual's lifetime to monitor the use of the lifetime exemption limit.
Incorrectly deducting charitable gifts or tuition/medical expenses is another error. Not all gifts qualify for deductions on the IRS 709 form. Gifts made directly to educational or medical institutions for someone's tuition or medical expenses, for example, do not always require filing a form 709.
It’s not uncommon to see mistakes in the arithmetic on the form. This can happen when totaling up gifts or applying exclusions and deductions. A simple math error can significantly affect the tax liability or the use of the lifetime exemption.
Another error that is frequently made is failing to sign and date the form. Like any other tax document, the IRS requires a signature for validation. An unsigned form can lead to processing delays or be considered incomplete.
People often miss the deadline for filing the IRS 709 form. The form is due by April 15th of the year following the year in which the gift was made. Missing this deadline can lead to penalties and interest on any owed gift tax.
Incorrectly splitting gifts between spouses can cause issues, too. Spouses can combine their annual exclusions to double the amount they can gift to an individual tax-free, but this requires both spouses to consent on the form. Not handling this correctly can lead to unintended tax liabilities.
Lastly, filers sometimes forget to keep copies for their records. It’s essential to keep a record of what’s been filed in case the IRS has questions or in the event of an audit.
Avoiding these common mistakes can help ensure the IRS 709 form is completed accurately. This can prevent unnecessary stress, potential audits, and financial penalties down the line. Always double-check the form for accuracy and consult with a tax professional if you have any doubts or questions.
When preparing the IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, individuals often find that supplementary documents and forms are necessary to provide a comprehensive and accurate tax declaration. This requirement stems from the intricate nature of tax regulations surrounding gifts, transfers, and trust distributions in the United States. Below is a list of forms and documents commonly used alongside IRS Form 709 to streamline the process and ensure compliance with the tax laws.
Navigating the preparation of IRS Form 709 alongside these additional documents requires diligence and an intricate understanding of tax laws and regulations. Individuals should consider seeking professional guidance to ensure compliance and optimize their tax planning strategies. The list herein provides a foundational understanding of the components that might complement the gift tax return process, addressing both mandatory and supportive documentation needs.
The IRS 709 form, United States Gift (and Generation-Skipping Transfer) Tax Return, serves a specific purpose in the realm of tax documentation, but it shares similarities with several other IRS forms in both function and content. One such form is the IRS 1040, the U.S. Individual Income Tax Return. Like Form 709, Form 1040 is an annual filing requirement. While Form 1040 reports an individual's annual income tax, Form 709 deals with the reporting of gifts that exceed the annual exclusion limit, highlighting both forms' roles in the individual tax responsibility landscape.
The IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, also bears resemblance to Form 709 in its focus on transfer taxes. While Form 709 is used for reporting gifts made during one's lifetime that exceed the annual exclusion, Form 706 is required for reporting the transfer of estates after someone's death. Both forms are integral to the IRS’s efforts to track transfers of wealth that might otherwise evade taxation.
Another related document is Form 941, Employer's Quarterly Federal Tax Return. Though seemingly different because it is used by employers to report payroll taxes, it shares a reporting function with Form 709. Both forms play key roles in the federal taxation system: Form 709 tracks potentially taxable gifts, whereas Form 941 ensures the appropriate collection of employment taxes. Each form contributes to the IRS's broader goal of tax compliance and revenue collection.
Form 8821, Tax Information Authorization, while not a tax return, is connected to Form 709 through its role in allowing individuals to authorize third parties to access their tax information. Taxpayers might use Form 8821 to enable tax advisors to review records related to filed Form 709s, thus facilitating better management and understanding of their tax obligations and planning options. This ability to authorize representation enhances the taxpayer's ability to comply with complex tax laws, which both forms ultimately serve.
Lastly, Form 4506, Request for Copy of Tax Return, complements Form 709 by allowing individuals to request prior tax returns, including previously submitted Form 709s. This can be crucial for understanding one's past gift tax filings and ensuring consistency and compliance in subsequent years. Both forms, though different in function—one requests information, and the other reports it—are integral to maintaining accurate records and fulfilling one's tax responsibilities.
When filling out the IRS 709 form, known as the United States Gift (and Generation-Skipping Transfer) Tax Return, there are specific dos and don'ts to adhere to. This form is essential for reporting transfers of wealth to another individual without expecting anything in return. Here are seven crucial guidelines to follow for a smooth filing process:
Understanding the IRS Form 709, used for reporting gifts, can often be confusing. Many misconceptions surround its purpose and requirements. Here, we aim to clarify some common misunderstandings to ensure accurate and hassle-free reporting.
The IRS Form 709 plays a critical role in the reporting of gifts above the annual exclusion limit and generation-skipping transfers. Below are eight key takeaways individuals need to understand when dealing with Form 709:
Understanding these key points ensures that individuals can navigate the complexities of gift taxes effectively, leveraging exemptions and avoiding unnecessary penalties. It's advisable to consult with a tax professional when dealing with complex gift-giving scenarios.
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