When you offer a generous gift to one of your loved ones, you expect to be appreciated for the effort – not hit another layer of tax complexity during your annual return. 

But unfortunately, if you have been generous this year with either cash or assets, you may be required to complete Form 709. Since gifting can be part of a tax-planning strategy for wealthy individuals, it makes sense that the government wants to be alerted to gifts over a certain size. 

What do you need to know about the Form 709 instructions? 

With these simplified instructions, you'll be able to file your taxes in no time at all. Gather up the information listed here and you can breeze right through the five pages of Form 709 before the end of the tax year. 

About Form 709

The IRS Form 709 is designed for individuals who may make transfers subject to the federal gift tax in any given year. You may also have to file this form if you make generation-skipping transfers that are subject to taxation at the end of the year. 

How do you know if you need to file Form 709 with your taxes at the end of the year? 

If you made a gift to an individual that is more than $18,000 in 2024 or $17,000 in 2023, you likely need to file this form with your year-end taxes. Transfers can include cash, but they can also show transfers of assets such as equities or real estate.

It can also be used to denote transfers of property to someone who isn’t related to you and is 37 ½ years younger than you are (generation skipping tax exemptions). 

Keep in mind that the gift-giver is the one responsible for taxes on the gift rather than the person who receives it. If you decide to give generously to anyone, you will likely need to file a Form 709.

You may also need to file a Form 709 if you contributed to a 529 plan. If you make contributions above the annual limit in any given year, you will have to file Form 709 to mark gift-splitting that spreads out the donation across five years. 

Form 709 Instructions

Form 709 is a five-page form but it isn’t as complicated to fill out as most people are led to believe. With a little bit of preparation, you can get the paperwork filed in no time at all.

Once you know that you need to fill out this form with your year-end taxes, the best starting point is to determine which gifts require reporting this year. If applicable, this is also the time to discuss if you and your spouse will split any gifts this year. This should all help you fill out lines one through nineteen in part one. 

Gifts are then reported in Schedule A according to the gift type:

• Part 1 - gifts subject only to gift tax

• Part 2 - direct skips

• Part 3 - indirect skips and other transfers in trust

Schedules B or C may or may not apply to your giving situation. Be sure to review them before proceeding and fill them out with any necessary information now. 

Schedule D will need to be completed if your gift was listed in Part 2 or 3 of Schedule A. 

From here, you can segue with all of the compiled details into Part 2 (Tax Computation). It will look at all of the information compiled in Schedules A, B, C, and D to help you figure out what the tax balance due will be on your gifts. Part 2 consists of twenty questions that walk you through everything you need to know to calculate the balance. 

From here, you have finished the Form 709 and will need to sign and date the return. Make sure that all fields are filled out in their entirety for the form to be accepted by the IRS at the time of filing. 

Can Form 709 Be Filed Electronically? 

One of the easiest ways to file your taxes is to submit your forms and documents electronically at the end of the year. This makes things smooth and seamless for filing and allows you to get to the bottom of your taxes much faster. Unfortunately, Form 709 cannot yet be filed electronically. 

Instead, you will need to print out a copy of Form 709 and mail it to the IRS. A tax professional can help you get your paperwork in order and mail it to the appropriate place at the end of the year, if necessary. 

Win the Tax Game with Consilio

Navigating the complex tax rules you’re subject to can be a challenge for even the smartest working professionals, but it’s a crucial part of protecting your wealth and making the most of your generous gifts to others. The right gifting strategy could even help you avoid the headache of Form 709 entirely. 

Consilio Wealth Advisors specializes in helping tech professionals like you with all of your wealth planning in the coming year. Our team of fiduciaries always acts in your best interest and can help you make the most of your giving to those you care about each year. We can assist you in making the most of your wealth and make wise decisions that benefit your bottom line. 

Reach out to us today to learn more about how we can assist you with your generous giving!

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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

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