Taxable Gift Reporting on Form 709
Many wealthy families completed gifting plans in 2021 to use the increased BEA, and will need to report taxable gifts on a Federal Gift Tax Return—Form 709.
January 28, 2022 at 02:10 PM
8 minute read
The Tax Cuts and Jobs Act (TCJA) temporarily increased the federal estate, gift and generation-skipping transfer (GST) tax exemptions from $5,000,000 to $10,000,000 (the federal estate and gift tax exemption is referred to as the "Basic Exclusion Amount" or BEA), adjusted annually for inflation. On Jan. 1, 2026, under the TCJA, the BEA (and GST exemption) reverts to $5,000,000, adjusted for inflation.
After the 2020 election, certain tax proposals provided for a reduced BEA (from $11,700,000 in 2021) to take effect as soon as Jan. 1, 2022, four years earlier than the TCJA sunset. As such, many wealthy families completed gifting plans in 2021 to use the increased BEA, and will need to report taxable gifts on a Federal Gift Tax Return—Form 709. Form 709 is due on April 15, 2022, unless the donor (1) files an extension of time to file the donor's federal income tax return, or (2) files Form 8892 to extend the time to file Form 709. Note that as of the date of this article, no change to the BEA was made, and the 2022 BEA is $12,060,000.
|Reporting Requirements
Typically, gifts in excess of the annual exclusion amount ($15,000 in 2021, $16,000 in 2022), as well as gifts of future interests that do not qualify for the annual exclusion, are subject to federal gift tax reporting requirements. Gifts made for qualifying educational or medical expenses are excluded from gift tax and are not required to be reported on Form 709.
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