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Gifting - Gift Tax Filing Requirements

Gift Tax Filing Requirements
Generally, you must file a gift tax return on Form 709 if any of the following apply:

  • You gave gifts to at least one person (other than your spouse) more than the annual exclusion for the year.
  • You and your spouse are splitting a gift (see below).
  • You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy or receive income from until some time in the future.
  • You gave your spouse an interest in property that will be ended by some future event.

Calculation
The short formula for computing gift taxes for the current year is:

Tentative tax – (Prior year gifts x Current gift rates) – unified credit, where:

  • Tentative tax is the gift rate applied to adjusted taxable gifts for the current or preceding years.
  • Adjusted taxable gifts for current or preceding years represent the total of gifts (at FMV), in excess of exclusions and deductions. The tentative gift tax is reduced by the product of the prior years' adjusted taxable gifts and the current year rates.
  • Current gift rates are the same unified transfer tax rates as used for computing estate taxes.
  • Unified credit is a base amount of $1,730,800, the equivalent estate or gift tax on the first $5,340,000 of taxable transfer (in 2014) reduced by the amounts allowed as credits for all preceding years.
Exclusions and Deductions
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