How to File a Gift Tax Return

gift tax return

A gift tax return is a form filed by the giver of a taxable gift to report the gift to the IRS and is responsible for paying any associated gift taxes. A gift tax return is normally due by Tax Day (April 15) of the year following that in which the taxable gift was made. The IRS releases a new version of the form each year. In some cases, you may need to file a gift tax return even if you don’t expect to owe any gift taxes.

If you want to make a large gift that will trigger the gift tax, you should talk with your financial planner and/or estate attorney. These professionals can help you plan the timing of your gifts to minimize your gift taxes. You will also need to consider other factors such as whether you have other assets and/or liabilities that should be accounted for, any income or losses that could impact the amount of gift tax you owe.

The federal and Connecticut gift tax laws have numerous rules and regulations. It is important to consult with your financial professional, estate attorney or a certified public accountant before making any significant gifts.

For example, you must file a gift tax return if you give a gift of a present interest that is not a qualifying personal or family residence or farmland and that is valued at more than $164,000 per taxpayer in 2022 or $171,000 in 2023. Also, you must file a gift tax return for transfers of a future interest to non-citizen spouses and for some medical and educational expenses.

A gift tax return must be filed if you transfer property to another person and that person’s children, other relatives or trusts for their benefit. This includes life insurance policies where a death benefit is paid to a beneficiary other than the insured’s children. You must also report a gift if you give money to a university or other charitable organization and that entity uses the money for your tuition, medical or other expenses.

If you have made a taxable gift, you must file a gift tax return on Form 709. This is the United States Gift and Generation-Skipping Transfer Tax Return. It reports your taxable gifts and allocates your lifetime exemption.

You must report the total value of your taxable gifts on Schedule A, Part 1. If you have claimed any discounts in valuing the gift, be sure to include a description and supporting documentation for the discount claimed. This is especially important when claiming discounts for lack of marketability, minority interests, fractional interests in real property or blockage and for other reasons. The IRS can disallow any discounts that are not supported by documentation. You must also report the amount of any tax-deductible contributions you have made to charities on Schedule A, Part 3.