What Is Form 709?

IRS Form 709 Explained

Mother and daughter exchanging gifts
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Definition

Form 709 is used to report to the IRS any taxable gift money that is subject to the gift tax or generation-skipping transfer taxes. The form is called the United States Gift (and Generation-Skipping Transfer) Tax Return.

Key Takeaways

  • Form 709 reports gifts made in excess of the annual allowed exclusion, and it tells the IRS whether you’re paying gift tax now or would like to defer it until the time of your death.
  • Form 709 is filed by the person giving the taxable gifts, who is also responsible for paying any associated gift tax.
  • The five-page form will help you with calculations and will guide you past the schedules that do not apply, Claiming a lifetime exemption is simply a matter of checking a box.
  • Form 709 is due by Tax Day of the year following that in which taxable gifts are made, normally on or around April 15.

How Tax Form 709 Works

Form 709 is used to report taxable gifts made during a taxpayer's lifetime, and it also allocates the lifetime use of a taxpayer's generation-skipping transfer (GST) tax exemption.

You must file Form 709 if:

  • You're going to pay the tax on your gifts over the annual exclusion
  • You're going to assign the gifts to your lifetime exemption
  • You want to split the gifts with your spouse

Below you can the form for tax year 2021. The IRS usually releases a new form every tax year.

Form 709

Large estates are taxed on their value when someone dies and leaves their property to beneficiaries. Someone could dodge the estate tax by giving away their money over time, and that's why there is the federal gift tax. Reporting gifts on Form 709, and the potential tax that might come due, ensures that the IRS doesn't get cut out because there's no property left to transfer after death.

You might have to file IRS Form 709 and pay gift tax if you make one or more transfers of cash or property, but there are several exceptions to know about first.

Who Uses Form 709?

The recipient of a gift isn't liable for this tax, but rather the person who gave the money as a gift must file Form 709 and pay any tax owed—if the gift qualifies. Generally, the gift tax applies to transfers of property from one person to another whenever the recipient doesn't pay the fair market value in exchange.

If a parent were to transfer their home to their child for $1, gift tax would be payable on the difference between fair market value and what was actually paid. That would require filing IRS Form 709.

Note

Extending someone a loan without interest is also considered a gift, as is forgiving a loan or canceling a debt that someone owes you.

Where To Get Form 709

The IRS provides an interactive Form 709 on its website. You can complete it online and then save and print out your finished copy.

How To Fill Out and Read Form 709

You must file Form 709 whenever the total value of all gifts you make to a single individual within the same calendar year exceeds the annual limit, which is $16,000 for tax year 2022 and $17,000 for tax year 2023.

Part I of Form 709 is for general information. It involves a series of questions and fill-in-the-blanks intended to identify you and the nature of your gift or gifts. Part II then walks you through the process of computing any tax due.

Schedules A, B, C, and D on pages 2-5 of the form provide you with the option to use certain tax provisions to avoid paying gift tax. For example, you can apply the $16,000 annual exclusion for 2022 to a gift and only pay tax on the remaining balance, or you can apply your gifts to the lifetime unified credit so you can potentially avoid paying gift tax entirely on the gift you made in 2022.

The Annual Exclusion for Gift Taxes

The "annual" in "annual exclusion" is an important distinction. Technically, you could have given your child $16,000 on Dec. 31, 2022, and another $17,000 on Jan. 1, 2023, for a total of $33,000 without incurring a gift tax, because the gifts were made in separate tax years.

The exclusion for the gift tax counts per person, each year. For example, you could have given your child $16,000 on Dec. 31, 2022, and your spouse $16,000 on the same date, because the exclusion is per person, per year.

Let's look at another example. You've made a taxable gift of $16,000 if you give your child $16,000 to buy a car and another $16,000 to pay off their credit card debt in tax year 2022. That is $32,000 in total, so after subtracting the year's $16,000 exclusion, you still gave them a gift of $16,000, for which you would need to file Form 709.

Note

The annual gift exclusion is indexed inflation and usually increases by $1,000 each tax year.

'Splitting' Your Gifts 

Married individuals can "split" their gifts between them to double the annual exclusion. 

For example, your spouse could give your child $10,000 to buy a car and another $10,000 to pay off their credit card debt. They can file Form 709 and report that they made a taxable gift—the balance between the gift of $20,000 and the annual exclusion for that tax year—or they can file Form 709 and report that the two of you have elected to divide the gifts between you. In that case, each of you would be considered to have made a $10,000 gift, each coming in under the annual exclusion. No tax would be due, even if the entire $20,000 were to come from an account in your spouse's sole name.

The Lifetime Unified Credit

The Internal Revenue Code also provides for a lifetime exemption from gift taxes. Let's say you give your child $30,000 and you pay the gift tax on the balance between that amount and the annual exclusion. If you didn't want to do that, you could charge that balance to your lifetime exemption. 

For tax year 2022, you could give away up to $12.06 million over the course of your life without paying any gift tax. For tax year 2023, that limit is $12.92 million.

But there's a catch.

The gift tax and the estate tax share this exemption, thus the title "unified credit." Let's say over the course of your lifetime you gave away $500,000 in gifts. You also have a net estate worth $10 million. If you died in 2023, the value of these gifts would be added to your net estate, which would be $10.5 million. Since that does not exceed the exclusion amount of $12.92 million for 2023, an estate tax return would not be required.

Some Gifts Are Exempt

An unlimited marital deduction covers gifts made to spouses who are U.S. citizens. You can give as much to your spouse as you like, either before or after your death, free of tax.

Gifts made to a spouse who isn't a U.S. citizen are taxable, however. The threshold is $164,000 for tax year 2022, and $175,000 for tax year 2023. Gifts exceeding this amount are subject to the gift tax.

You can pay someone's tuition or medical expenses without incurring the gift tax, as long as you pay the institution or the care provider directly. Gifts to charities and to political organizations are tax-exempt as well.

Note

Consult with an estate planning attorney or an accountant if you're uncertain whether gifts you've made during the course of the year should be reported to the IRS on Form 709.

Can Form 709 Be E-Filed?

You'll have to send your Form 709 to the IRS the old-fashioned way. The IRS accepts only paper copies of this return, mailed in envelopes bearing USPS postage. The form can't be electronically filed.

Where To Mail Form 709

IRS Form 709 should be mailed to the Department of the Treasury, Internal Revenue Service Center, Kansas City, MO 64999.

Requirements for Filing Form 709

Form 709 lets the IRS know how you want to handle the tax. It's a way to memorialize the transaction, even if no tax is due.

IRS Form 709 is due by Tax Day, usually on or around April 15 of the year following the year in which you make the taxable gifts. If you find that you have to file IRS Form 4868 to request an automatic six-month extension to file your personal income tax return, this form also extends the time you have to file IRS Form 709. You don't have to take any additional steps or file an extra form.

You can also file IRS Form 8892 to receive an automatic six-month extension to file IRS Form 709 if you don't have to extend the time to file your personal tax return.

Frequently Asked Questions (FAQs)

How do you fill out Form 709?

To fill out Form 709, you'll need some info from Schedules A, B, C, and D, which you can find on pages 2-5 of the form. On page 1, there are two parts to fill out: Part I for general information like your name, address, and filing status, and Part II for calculating the tax you may need to pay on the gifts you gave that year. Be sure to read the instructions before filling out Form 709 and ask a tax professional if you need help.

When is Form 709 due?

Form 709 is due by Tax Day, usually on or around April 15. You would file Form 709 with your tax return by that date in order to understand your tax bill (or refund) for the prior tax year.

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Sources
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  2. IRS. "Instructions for Form 709."

  3. IRS. "Frequently Asked Questions on Gift Taxes."

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