Filling requirement For Form 709 (GIFT)

A client recently shared a heartwarming story: she gifted her son $25,000 this Christmas to help him buy his first car. It was her way of spreading holiday cheer, but this generous gesture came with a filling requirement of form 709.


𝗧𝗵𝗲 𝗕𝗮𝘀𝗶𝗰𝘀

The IRS allows you to give up to $18,000 per recipient annually without filing a gift tax return. This is your tax-free zone for gifts to friends, family, or anyone else.

𝗚𝗶𝗳𝘁𝗶𝗻𝗴 𝗕𝗶𝗴? 𝗙𝗶𝗹𝗲 𝗙𝗼𝗿𝗺 𝟳𝟬𝟵

When your gift exceeds $18,000, you must report the excess.
Example: My client’s $25,000 gift to her son.
$25,000 – $18,000 = $7,000 to report on Form 709.

𝗡𝗼 𝗧𝗮𝘅𝗲𝘀 𝗬𝗲𝘁 (𝗨𝗻𝗶𝗳𝗶𝗲𝗱 𝗖𝗿𝗲𝗱𝗶𝘁 𝗶𝗻 𝗔𝗰𝘁𝗶𝗼𝗻)

Filing doesn’t mean you owe taxes. The excess reduces your lifetime gift & estate tax exemption of $12.92M (2024 limit). Taxes only apply when your lifetime gifts + estate exceed this amount.

𝗪𝗵𝗼 𝗡𝗲𝗲𝗱𝘀 𝘁𝗼 𝗙𝗶𝗹𝗲?

If you’re gifting more than $18,000 this holiday season, you must file Form 709 by April 15, 2025. Gifts can include cash, property, or even paying bills. However, direct payments to schools or hospitals are excluded from the gift tax.

𝗪𝗵𝗼 𝗣𝗮𝘆𝘀 𝘁𝗵𝗲 𝗧𝗮𝘅? 𝗧𝗵𝗲 𝗗𝗼𝗻𝗼𝗿!

Gift taxes are always the donor’s responsibility, not the recipient’s. But when donees agree to pay the taxes, complications can arise.

𝗗𝗶𝗲𝗱𝗿𝗶𝗰𝗵 𝘃. 𝗖𝗼𝗺𝗺𝗶𝘀𝘀𝗶𝗼𝗻𝗲𝗿

In Diedrich v. Commissioner, the U.S. Supreme Court ruled against taxpayers who transferred property to their children with the condition that the children pay the resulting gift taxes. The Court determined that this arrangement relieved the donors of a financial burden, creating taxable income for the donors.

Gift taxes are meant to be paid by the donor.

Diedrich v. Commissioner – https://lnkd.in/dsA___74

This holiday season, spread the joy—but keep your tax plan in check. Generous gifts don’t always mean extra taxes, but knowing the rules can help you avoid years of hassle.

Remember: Dream big, but file smart.