Gift tax returns are federal tax forms that must be filled out by any individual who gives a gift that exceeds the annual or lifetime exempt gift amount established by the IRS. In almost all cases, it is the person who gives the gift that is responsible for paying the gift tax and filing the gift tax return. Our attorneys at Morris Law Group can guide you through the process of filing a gift tax return.
Outright Gifts of Cash or Property
All gifts of cash or property in excess of $15,000 (in 2018) to an individual other than a spouse require a gift tax return. As a result of the gift, your lifetime estate and gift tax exemption ($5,600,000 in 2018) will be reduced by the value of the gift that exceeds the $15,000. However, no gift tax will be due with the return unless you have fully used your lifetime estate and gift tax exemption.
Gifts of Cash or Property in Trust
When you gift cash or property to a trust, including a life insurance policy or premium payments to be made on a life insurance policy, you are making a gift to the trust’s beneficiaries. If the gift to the trust’s beneficiaries does not exceed $15,000 (in 2018) per beneficiary, and Crummey withdrawal notices are properly used, a gift tax return may not be required unless the trust is structured as a generation-skipping transfer (GST) tax trust. If a gift is made to a GST trust, it may be advisable to allocate the donor’s GST exemption to the trust. While this allocation is usually automatic, it is advisable to either opt out of the automatic allocation rules for record keeping purposes or file a return showing the allocation of the GST Exemption. If a gift to a trust exceeds $15,000 per beneficiary, a gift tax return is required to be filed.
Filing a Gift Tax Return
The due date for filing a gift tax return is the same due date as your individual income tax return. This date can be extended by extending the time to file your individual income tax return using Form 4868 or Form 2350. This due date can also be extended by filing a Form 8892 to request an automatic 6-month extension if you do not request an extension for your individual income tax return. However, neither of these methods will extend the time to pay gift or GST taxes due.
Most CPA’s are willing and able to prepare gift tax returns. However, many prefer not to due to the complex rules that apply to the allocation of GST exemption and other special disclosures. Because of these complexities, we prefer to review all gift tax returns prepared by your accountants to ensure they align with your estate planning goals.
At Morris Law Group, we can handle the complex process of preparing and filing gift tax returns. Our expert attorneys and paralegals have the years of experience needed to prepare and/or review these returns. Contact our office today!