Watch this video if you gifted more than $18,000 in 2024 | How to fill out Form 709

Have you gifted more than $18,000 in 2024? If so, you'll need to fill out a Form 709 to properly report your gift. We briefly touch on how to complete this form in this video.

Transcript:

Curious if you need to fill out a form 709. Curious what a form 709 is. We're going to talk about that in this video. I'm Chris Kaminski, co-founder and partner here with Consilio Wealth, where we specialize in working with technology professionals at Amazon, Microsoft, Meta, and Google.

Form 709 is required if you gift over the annual gifting limits. In 2024, the annual gifting limit is $18,000 per person. That is for the person giving the gift, not receiving the gift and if you give more than $18,000, Form 709 allows you to split gifts with your spouse if you are married. So, if you give $20,000 to your daughter, for example, you're going to need to fill out a Form 709. In addition, if you give more than $36,000, so let's say you gave $40 000, so four more than the gift splitting maximum on the year. You need to put this on a Form 709 because the additional amount above that 18 or $36,000 maximum if married goes against your lifetime exemption, which is currently $13.61 million at the federal level here in 2024.

Note that some accounts allow for special provisions to front load contributions. These are 529 plans. 529 plans have a special rule that allow for five years of gifting contributions to go into them, and you don't have to pay gift tax and the amounts do not go against your lifetime exemption. So, $18,000 a year can go into a 529 plan per person. So, I can put $18,000 into a 529 plan for my son. My spouse can put $18,000 into that same 529 plan for our son and we both can put five years’ worth of contributions into that plan in a single year.

That means each of us can put $90,000 or $180,000 combined into that 529 plan in one year. All of that needs to go on a form 709. The form 709 allows the IRS to know that I front loaded five years’ worth of gifts into my 529 plan for the beneficiary or for my son and essentially that form will amortize those gifts over five years at a rate of $36,000 a year. That's how that works. So, in any instance, if you've given more than $18,000 to anybody, you need to fill out this form. So how do you do that?

Form 709 is a five-page form. It looks complicated, but probably not all the sections apply to you. Part one is gifts only subject to gift tax. Part two is direct skips. Part three is indirect skips or other transfers into trust. Schedules B and C probably don't apply to you, but make sure to read through them just to see if they do. And schedule D will need to be completed if your gift is listed in part two or part three on your schedule A. So, once you've figured out which section applies to you, and you fill this out, you're going to go all the way down to the bottom of the form. There's a list of 20 questions. All of this is going to help you calculate the tax.

Likely in most scenarios, if you followed the rules that I said above, $18,000 gift maximum in 2024 or 36 for spouse or five full years into a five to nine plan, likely the amount of tax that you owe is going to be zero. Also, likely the amount that goes against your lifetime exemption is going to be zero, because again, this form is really just designed to create a paper trail around.

Did you gift more than $18,000 in a single year? And it's making sure that there's a paper trail on that. One last thing to note, the Form 709 cannot yet be filed electronically. So, although your tax return can be filed electronically, the Form 709 actually has to be printed and mailed in directly to the IRS.

Once again, this is one of those more complicated issues that probably working with a CPA or a tax professional is a good idea just to make sure that it's filled out correctly. And the purpose of this video is to hopefully simplify this form. It's long, there's a lot of questions on it but not all of them are going to apply to you. So, it is relatively straightforward, I think, once you read through it. But again, one of these areas that if you want to make sure that you're filing it correctly, certainly work with a qualified CPA or tax professional to help you out.

All right, I hope this video was helpful.