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Allocation 529 overcontributions on form 709

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Level 2

Hi,

My client is filing MFJ and contributed $33,000.00 to a 529 education account in 2019.  How do I enter the information on form 709? 

 

Thank you!

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Highlighted
Level 15

There is no allocation from F.1040 to F.709.  You will need to create a new gift tax return under that client.  Your client may decide to split the gift and have $3k excess over the annual exclusions or do a 5-year proration by checking Box B on Sch A.

  1. When you're in 709, click on Donee Information on the left panel;
  2. On the input screen, make the necessary input for the donee (to add a new donee, click on the + sign on the tab);
  3. Click on Gifts > Taxpayer's Gifts on the left panel;
  4. On the input screen, type in "529 Plan Contribution" (or something to that effect) in the box for Description of gift and enter all the relevant details (to add a new gift, click on the + sign on the tab);
  5. Since your clients are splitting gift and would like to prorate it over 5 years, enter $6,600 as gift.  Columns G and H of Sch A, Part I will then report only $3,300 of that;
  6. Since your clients are electing to prorate the 529 contribution over 5 years, click on General > Miscellaneous Information on the left panel, scroll to the last line under the General Information section, and enter 1 for 1=transfers made to qualified tuition program under both the TAXPAYER and SPOUSE columns; and
  7. Click on General > Client Information, scroll down to the Spouse Information section, and check the box for Will file Form 709.
  8. Complete all the other input for the gift tax return as usual.

Two gift tax returns, one for the taxpayer and one the spouse, will be created using the same information already entered.  Both returns will now have Box 17 checked for Yes.

[Edited to reflect process for preparing split gift with 5-year proration]

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Still an AllStar

View solution in original post

6 Replies 6
Highlighted
Level 15

There is no allocation from F.1040 to F.709.  You will need to create a new gift tax return under that client.  Your client may decide to split the gift and have $3k excess over the annual exclusions or do a 5-year proration by checking Box B on Sch A.

  1. When you're in 709, click on Donee Information on the left panel;
  2. On the input screen, make the necessary input for the donee (to add a new donee, click on the + sign on the tab);
  3. Click on Gifts > Taxpayer's Gifts on the left panel;
  4. On the input screen, type in "529 Plan Contribution" (or something to that effect) in the box for Description of gift and enter all the relevant details (to add a new gift, click on the + sign on the tab);
  5. Since your clients are splitting gift and would like to prorate it over 5 years, enter $6,600 as gift.  Columns G and H of Sch A, Part I will then report only $3,300 of that;
  6. Since your clients are electing to prorate the 529 contribution over 5 years, click on General > Miscellaneous Information on the left panel, scroll to the last line under the General Information section, and enter 1 for 1=transfers made to qualified tuition program under both the TAXPAYER and SPOUSE columns; and
  7. Click on General > Client Information, scroll down to the Spouse Information section, and check the box for Will file Form 709.
  8. Complete all the other input for the gift tax return as usual.

Two gift tax returns, one for the taxpayer and one the spouse, will be created using the same information already entered.  Both returns will now have Box 17 checked for Yes.

[Edited to reflect process for preparing split gift with 5-year proration]

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Still an AllStar

View solution in original post

Level 2

Hi,

Thank you so much!  In the donor's gift screen (as well as spouse's screen) should I enter 1,500.00, or 16,500.00 since I want to prorate over 5 years?  Here is my confusion.

 

Great help!

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Level 2

This regarding my previous post.  It will be a split gift.

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Level 15

@ZembasI have updated the post above to lay out the input you need to make to create two returns with split gift and election for 5-year proration.

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Still an AllStar
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Level 2

I appreciate your help very much!

Thank you!

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Level 15

NP, @Zembas!  Anytime!

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Still an AllStar
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