Hi, I'm a staff accountant from Louisville with a background in accounting. Today, we will be discussing important information about gift tax returns. The Internal Revenue Code section 2501 imposes a unified gift and transfer tax on individuals who give gifts. However, there are several exclusions, including annual and lifetime exemptions from the tax. Individuals are required to file a gift tax return under the IRC, and married couples have the opportunity to split their gifts. Filing a gift tax return has benefits such as complying with the law, avoiding IRS penalties and interest, and establishing the fair market value of the gift within the limited three-year audit period. This allows for more control over estate planning and potential cost savings. According to the IRC, gifts are defined as transfers of money or property without adequate consideration, including cash, checks, and below-market sales of property. Examples of gifts also include debt forgiveness, interest-free loans, gifts of stock, and other property. Many exclusions exist, such as direct payments to schools or medical providers on behalf of someone else, political and charitable contributions, and contributions to a spouse or foreign spouse up to $147,000 per year. Each year, donors must tabulate the total amount of gifts given by the recipient. Any gifts over $4,000 become taxable and require the filing of a gift tax return. However, there is a lifetime exclusion of $5.43 million before any tax is due. Tax rates for gifts range from 18% to 40%, depending on the amount of the gift. Due to this large lifetime exclusion, many individuals may be required to file a gift tax return during their lifetime, but few will actually owe any gift tax. For certain types of gifts, such as future interest, split gifts, or taxable gifts over $14,000, individuals must file IRS Form 709,...
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Irs 709 explained Form: What You Should Know
For the purposes of these rules, a recipient of a gift is any person who is not specifically named on the gift. You are a recipient if you: • Received or caused to be received something of value • Have a legal or equitable claim on the gift • Received the gift as a part of a transfer as a beneficiary of an IRA, or • Are or had been a participant in the plan to provide, pay, or provide benefits for your child or other individual who becomes a dependent of you for the entire 2024 tax year. A person is an individual who is not an employer and is not a government entity. A government entity is a state, local, territorial, or federal government agency. A non-profit, or a corporation, is a corporation that is not a government entity, and is not owned or controlled by any government entity. A trust is a group or individual that is established for the sole purpose of one or more specific beneficiaries and has been established to provide, pay, or provide benefits for your child or other individual whose income has been reduced or eliminated as a result of the gift. Taxpayers have specific reporting requirements to be sure their gift is properly reported to the IRS. If you have specific questions about whether a gift is correctly reported to the IRS, or to help you with your tax preparation, please contact your tax advisor. Do I still need a gift tax return form to report gifts made in the year 2024? — Yes. If you have not filed (or expect to file) Form 709 with the IRS during the 2024 tax year, you should file Form 709 by September 9. Do I still need a gift tax return form to report gifts made in the year 2024? Yes, if you made a gift to a political organization or a person that you knew was a political organization within the meaning of Section 501(c)(4) or (c)(5) of the Internal Revenue Code on or before April 20, 2017, or made a gift valued at 25,000 or more during the 2024 tax year.
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