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Gift Tax Return

GodFather
Level 3

MFJ, older clients, want to, for the first time ever, gift their 4 children, children’s spouses, and possibly grandchildren amount more than $15,000 each.  It could be well above that amount and they do not plan to pay an educational institution directly.  I’ve never completed form 709 but I have researched it.  A few questions:

  • Assuming each spouse gives $15,000 or less to each child, each child’s spouse, each grandchild, they would not need to complete form 709?
  • Assuming each spouse gave each child, each child’s spouse, each grandchild $15,001 or more,  form 709 would be required? 
  • If they do need to complete form 709, I assume the reporting would be on Schedule A and each spouse would provide information for the gifts they made?  
  • The gifts would be below the lifetime gift exclusion.  Must this be reported anywhere or is that all reflected within Schedule A?

I will suggest to my clients that they keep the gifts at or below $15,000 for each family member.  Assuming they want to gift more, I would appreciate your advice on completing form 709.

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BobKamman
Level 15

Your question was not out of place and you were just trying to confirm what your research had led you to believe.  The 709 is an incredibly easy form in situations like yours and you shouldn't fear it -- or let that fear be the cause of your suggesting to clients that they not put you in the position of having to fill one out.  

I looked for examples of filled-out Forms 709 and there aren't many good ones.  Try the Internal Revenue Manual and scroll down to the part about them that appears after the Form 706 information. 

https://www.irs.gov/irm/part3/irm_03-011-106r

 

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11 Replies 11
ljr
Level 5

Each spouse can gift up to $15K per person per year. Any amount over that to 1 person would need a gift tax return. Nothing goes on schedule A for a gift ever.

sjrcpa
Level 15

The gift tax return has a Schedule A.

@GodFather  Should you be telling your clients whether or not to make gifts over $15K?

 


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BobKamman
Level 15

@sjrcpa "Should you be telling your clients whether or not to make gifts over $15K?"

What's the point of doing tax returns if you have to mind your own business?  I always tell my clients what I think.  I tell them there are two kinds of people:  Those who can afford to give away some of their wealth, but never do; and those who can't afford to do it, but often will.

But a married couple can give another married couple $60,000, and that's enough to squander on a new Porsche.  So I suggest to some clients who can afford it, that maybe they start out with that amount and see what happens to the money, and then decide whether to continue with their generosity. 

Incidentally, the gift tax exclusion is indexed to inflation, but only in $1,000 increments.  With today's 5.9% increase, I suspect it will go up to $16,000, taking into account the last few years where it wasn't enough to make a difference.  

GodFather
Level 3

I make suggestions from a tax perspective and what would potentially be the less "involved" solution.  They can make a gift or not make a gift, its totally up to them.  They can make it for a penny or a million dollars, it doesn't matter to me. 

qbteachmt
Level 15

"I make suggestions from a tax perspective"

Point out to them that this is October.

"I will suggest to my clients that they keep the gifts at or below $15,000 for each family member. Assuming they want to gift more,"

Point out to them that they can give this month or Nov or Dec, then wait until Jan to give another round. Keep it to the limits. Make your and their lives easier.

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Accountant-Man
Level 11

Form 709, page 2, Schedule A.

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Terry53029
Level 12
Level 12

You should do your own research, and if you have any questions check back here. You should start with 709 instructions: https://www.irs.gov/instructions/i709

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GodFather
Level 3

I've done my own research.  I've read through form 709.  I've never filed it before and never dealt with the form before.  That's why I posted to this forum.  Based on your response, I guess I should not have posted to the forum?

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BobKamman
Level 15

Your question was not out of place and you were just trying to confirm what your research had led you to believe.  The 709 is an incredibly easy form in situations like yours and you shouldn't fear it -- or let that fear be the cause of your suggesting to clients that they not put you in the position of having to fill one out.  

I looked for examples of filled-out Forms 709 and there aren't many good ones.  Try the Internal Revenue Manual and scroll down to the part about them that appears after the Form 706 information. 

https://www.irs.gov/irm/part3/irm_03-011-106r

 

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ljr
Level 5

absolutely post to the forum - we all try to help each other.

My advice to client would be to give each up to the $15K before the end of year and then they can give another $15K in January if they really did want to give more. Always try to find the easiest solution

qbteachmt
Level 15

"more than $15,000 each. It could be well above that amount"

And now there will be $60,000 per person (giftee) by the first week in Jan with nothing to report. That's pretty sweet.

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