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What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 4:32 pm
by ericinvest
I contributed $70k to a 529 plan account in 2015, and filed gift tax form 709 that year, for $14k contribution. Just realized I need file form 709 for five years, $14k for each, but I forgot to file for year 2016.

How should I fix this, amend 2016 return, or just attach one additional 709 form for 2017 return? Is there any penalty involved? Thanks!

Re: What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 4:33 pm
by WolfgangPauli
Is this your child? I did not know you had to file a gift tax for a 529 contribution. I thought education was exempt from that.

Re: What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 4:45 pm
by mhalley
Front loading is a special case. Did you fill out the form correctly? Shouldn’t you have filled it out for 70k? I thought you filled it out that year, and as long as you did not continue to contribute for the next 5 years you did not have to file form 709 again. Perhaps you need to fill out an amended form.
. the year that you superfund you enter 1/5th the amount into Part 1, ...and use the date of the year that you did the superfunding. In subsequent years, if you don’t make any more contributions you don’t have to file a 709.
http://www.bayalisistheanswer.com/hitch ... erfunding/

* I am not anywhere near a tax expert, nor have I slept at an HIE. Consult a tax expert.

Re: What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 7:05 pm
by ericinvest
@WolfgangPauli, @mhalley, thanks for the info. I checked form 709 that’s filed by my previous tax advisor and it did have an attachment saying it’s $70k across five years. So maybe I’m fine on this per the article linked by @mhalley. I’ll double check with him. Thanks!

Re: What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 7:06 pm
by codedude
ericinvest,

Not a tax expert, I did similar contribution in 2011, did not know that I had to file Form 709 till last year, so filed the 2011 form last year using the 5 year ratable with explanation. I have not heard from the IRS so I am guessing they are cool with it.

If I were in you place, I would file the 2015 form 709 again with the 5 year checkbox and explanation that it will be for 5 years from 2015.

Re: What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 8:03 pm
by codedude
Sorry did not see your previous post, but as you stated, you should be fine.

Re: What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 9:51 pm
by ericinvest
@codedude, great to hear your firsthand experience, and it really helps! Thanks.

Re: What to do — forgot to file gift tax for 529 plan contribution

Posted: Sat Feb 24, 2018 10:58 pm
by Leesbro63
What would be the harm in not filing, if you are not ultra wealthy? Wouldn’t the only downside be that $56,000 of the $70,000 gift would be disallowed, then deducted against the donor’s $11M lifetime exemption. Which wouldn’t matter unless the taxpayer was ultra wealthy or wins the lotto before dying.

I’m not advocating not filing a gift tax return. Just pointing out that the downside of getting it wrong is much lesss serious than just a generation ago when middle class people were exposed to federal estate tax on amounts over just $600,000