Form 709

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Topic Author
Caligas
Posts: 32
Joined: Mon Feb 18, 2019 2:28 pm

Form 709

Post by Caligas »

In 2015 we contributed $30k to our daughters 529. I now understand that this was over the max of $28k that would have allowed us to avoid filing the gift tax form 709.

Am I understanding correctly that I should go ahead and file the form from 2015 or should we not worry about it since it probably won’t ever be discovered ?

Could filing that form increase the risk of an audit of old taxes???

Finally, the form is fairly good confusing. Can I do this myself? Any good resources?

Thanks!!
Gleops2
Posts: 80
Joined: Wed Feb 20, 2013 11:43 am

Re: Form 709

Post by Gleops2 »

It's not a difficult form to complete, ( for what you are using it for).

It's just a place holder for the IRS to keep track of gifts you gave during your lifetime towards the lifetime exclusion.

RIght now that is about 11.8 million for a each person in a couple to gift to others.

The FIRST 15,000 requires no paperwork or filing. That is the annual exclusion.

WHen you file 709, you will indicate a 32000 gift, ,minus the 30000 exclusion (15000 each of you) leaving the 2000 towards the lifetime exclusion.

If you give a gift every year that is MORE than the annual exclusion, you FILE this form to the IRS to keep track of the amount OVER the annual exclusion amount.


Then, if at the end of your life you've gifted MORE than whatever the limit for lifetime is at that time, there will be taxes due.

YOU and your wife do NOT pay taxes on the gift at this time.

You can write a one sentence explanation ( "towards education of Nancy ") under where you declare the gift. I think it's Part A.

I filed this form when my Mom left me a bank account when she died that was joint tenant. Even though my sister's name was NOT on the account, I wanted to split the money with her ( which was Mom's intention). I had to file 709 because when Mom passed and I inherited the account.

Then I was now gifting the money to my sister from ME.... ( it was MORE than the annual exclusion amount and it was NOT an inheritance to her). I looked at 709 and thought it looked scary, then actually did it and it was not bad at all.

Hope this helps.
Gleops2
Posts: 80
Joined: Wed Feb 20, 2013 11:43 am

Re: Form 709

Post by Gleops2 »

delete.
Gleops2
Posts: 80
Joined: Wed Feb 20, 2013 11:43 am

Re: Form 709

Post by Gleops2 »

I see you mentioned 2015...sorry I read over so quickly.


Anyway , form 709 is not hard to complete.

If it was me, I'd leave it go for such a small amount.
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LadyGeek
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Re: Form 709

Post by LadyGeek »

For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

The OP understands that filing Form 709 in regards to a Gift tax is required. The discussion can continue from that perspective, including how to fill out the form.
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Topic Author
Caligas
Posts: 32
Joined: Mon Feb 18, 2019 2:28 pm

Re: Form 709

Post by Caligas »

Yeah, I already did it. Wasn’t too bad.
bsteiner
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Location: NYC/NJ/FL

Re: Form 709

Post by bsteiner »

Caligas wrote: Thu Apr 25, 2019 3:20 pm In 2015 we contributed $30k to our daughters 529. I now understand that this was over the max of $28k that would have allowed us to avoid filing the gift tax form 709.

Am I understanding correctly that I should go ahead and file the form from 2015 or should we not worry about it since it probably won’t ever be discovered?

Could filing that form increase the risk of an audit of old taxes???

Finally, the form is fairly good confusing. Can I do this myself? Any good resources?
You are correct that gift tax returns aren't always easy. We generally prefer to do them rather than having accountants do them for our review.

Depending on what other contributions to 529 plans you've made for her in subsequent years, it might (or might not) be advantageous to elect (see the top of page 2 of the return) to treat the contributions as if they were made ratably over 5 years beginning with the year of the contribution.
Greenman72
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Joined: Fri Nov 01, 2013 2:17 pm

Re: Form 709

Post by Greenman72 »

Plus, the IRS allows you to front-load 528’s with five years of exemption, so you could have put in $140k and still been safe.

Edit - the lawyer beat me to it. But I wonder why he says that he would rather file the 709’s than have the CPA do it. Seems like tax compliance is a CPA’s job.
bsteiner
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Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Form 709

Post by bsteiner »

Greenman72 wrote: Thu Apr 25, 2019 9:49 pm Plus, the IRS allows you to front-load 528’s with five years of exemption, so you could have put in $140k and still been safe.

Edit - the lawyer beat me to it. But I wonder why he says that he would rather file the 709’s than have the CPA do it. Seems like tax compliance is a CPA’s job.
Accountants have more sophisticated income tax return software and do most of the fiduciary income tax returns (Form 1041), and the decedent's final income tax return. While an estate is open we have input into the selection of a taxable year, and we review drafts of them.

We’re more likely to have more sophisticated estate tax return software and we almost always do the estate tax returns (Form 706). We do a relatively large number of them (though not as many as before now that the estate tax exclusion amount has been substantially increased). There also lots of issues that someone who doesn't do them regularly might not spot, such as whether to elect QTIP (you might not elect QTIP if the surviving spouse is elderly), reverse QTIP elections (and on several occasions getting permission to make late reverse QTIP elections) the credit for the tax on prior transfers, how to allocate the GST exemption, selecting appraisers, reviewing drafts of the appraisals, communicating with the appraisers, and deciding whether to take administration expenses on the estate tax return or the income tax return.

Gift tax returns fall in the middle. We do many of them each year, but accountants also do many of them. If the gifts are outright gifts of cash and marketable securities to non-skip persons (children or others no more than one generation younger than the donor) the accountant should be able to do it. But if there are valuation issues, we're better able to select appraisers, review drafts of appraisals and communicate with the appraisers. If there are gifts to trusts, we're better able to deal with allocating GST exemption or electing out of automatic allocation of GST exemption. We also have to deal with prior default allocations.

It should be noted that the IRS people who audit estate and gift tax returns are all lawyers, so we prepare them with that in mind.
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