What Is Form 709: United States Gift (and Generation-Skipping Transfer) Tax Return?
IRS Form 709 reports transfers of assets that may be subject to federal gift tax and certain generation-skipping transfer taxes. This form reports taxable gifts you make to others during your lifetime, including gifts of cash or physical assets, such as real estate. Form 709 is also used to allocate lifetime generation-skipping tax exemptions when transferring property to a beneficiary who isn't related by blood, marriage, or adoption, and who is at least 37½ years younger than the donor.
According to the IRS, if you gave gifts to an individual in 2022 that total more than $16,000, or more than $17,000 in 2023, you most likely need to file Form 709. Form 709 should be filed with your tax return for any year in which you make a taxable gift, but filing this form doesn't necessarily mean that you'll owe gift or generation-skipping transfer tax.
The generation-skipping transfer tax is an additional tax on a transfer of property that skips a generation, known as a generation-skipping transfer for short.
- Form 709 reports taxable gifts and generation-skipping tax lifetime exemption allocations.
- Certain types of financial gifts may qualify as exclusions for the gift tax.
- Generation-skipping tax ensures that the proper amount of estate tax is paid when a generation-skipping trust transfers assets among family members.
- Form 709 must be filed each year you make a taxable gift and included with your regular tax return.
Who Must File Form 709?
When you make a financial gift to someone, you—not the recipient of the gift—are responsible for paying any gift taxes owed. If you give gifts of cash, property, or other assets to someone during any given tax year, you're required to file Form 709 to report the gift.
There are, however, some scenarios in which financial gifts are not subject to the gift tax. These include:
- Gifts that fall within the annual exclusion limit
- Gifts to your spouse
- Tuition or medical expenses you pay on behalf of someone else
- Gifts to a political organization for its use
Gifts for tuition or medical expenses must be paid directly to the biller to avoid incurring the gift tax. If you want to help out a grandchild with college expenses, for example, you'd need to make tuition payments directly to the school. If instead, you were to give your grandchild the money to pay their tuition, it would fall under the taxable gift heading. The same is true if you're paying medical expenses. You'd need to pay the healthcare provider directly to avoid gift tax implications.
What Qualifies as a Taxable Gift?
For IRS reporting purposes, a gift is:
"Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return."
Examples of scenarios that may be considered taxable gifts include:
- A gift of down payment funds to an adult child to help them purchase a home
- Cash gifts made directly to a student to help pay for school
- Gifts of real estate or other property to someone
- Funds deposited into a 529 college savings account on behalf of a beneficiary other than yourself or your spouse
- Forgiving loans you have made to someone else
Gifts to qualifying charities are generally not subject to gift tax and may be deductible on your taxes if you itemize using Schedule A.
Annual and Lifetime Exclusions
The annual exclusion limit for 2023 is $17,000 (it was $16,000 in 2022). This limit doubles to $34,000 for married couples who file a joint return ($32,000 in 2022). The limit applies per recipient, so if you're married and have three children, you and your spouse could jointly gift up to $34,000 in 2023 to each of them annually without exceeding the exclusion limit. This is called gift splitting, but it's only allowed when you and your spouse file a joint tax return.
There is also a lifetime gift tax exemption. It is $12.92 million in 2023, up from $12.06 million in 2022.
How to File Form 709
You must file Form 709 for any tax year in which you make a taxable gift unless you're covered by one of the exclusions mentioned previously. If you file your tax returns electronically using online tax preparation software, you cannot complete this form online. Form 709 must be printed and mailed to the IRS; it's one of a handful of tax forms that can't be e-filed.
The form itself is a five-page document broken into sections covering:
- Personal information
- Details of financial gifts you made
- Details related to generation-skipping transfers
Form 709 is an annual return. Form 709, along with the rest of your tax return, is due by the annual filing deadline. For most tax years, the annual filing deadline is April 15 (it is April 18 in 2023). In general, you must file Form 709 no earlier than January 1, but no later than April 15, of the year after the gift was made.
If you think you'll need more time to prepare your return, you can file for a tax extension. Filing an extension gives you until October 15 to get your return finalized. You can request a six-month extension for filing Form 709 by completing IRS Form 8892.
Form 8892 covers extensions for gift tax or generation-skipping tax filings only. If you need an extension to file the rest of your tax return, you'd also need to file IRS Form 4868.
Download Form 709 Here
Form 709 is available for download on the IRS website. This form is free to download and use when filing your tax return to report gift taxes and generation-skipping tax exemptions. Though the form is five pages long, you may not need to complete all sections, depending on which information you're reporting for the year.
If you're filing a paper return and printing out a copy of Form 709, you can mail them both to the IRS at this address: Department of the Treasury, Internal Revenue Service Center Kansas City, MO 64999.
Completing and filing Form 709 may be confusing if you're unfamiliar with tax laws, so you may want to consult a tax professional before finalizing your return.
What Triggers a Gift Tax Return?
In tax year 2022, gifts exceeding the annual exclusion of $16,000 will trigger the gift tax. Tax would be owed on any amount over $16,000. The giver of the gift is required to file Form 709. For 2023, the annual exclusion is $17,000.
What Is the Lifetime Gift Tax Exemption?
For tax year 2022, the lifetime gift tax exemption is $12.06 million. In 2023, the exemption is $12.92 million.
How Much Can You Inherit from Your Parents Without Paying Taxes?
Over the course of your parent's lifetime, you can inherit $12.92 million from them without the inheritance being subject to the gift tax.
The Bottom Line
Taxpayers are required to file Form 709 with their tax return to report gifts made in excess of the annual allowed exclusion. The person giving the gift is the one who files it and pays the tax. Form 709 must be filed by the tax filing deadline of the year following when a taxable gift is made, which is typically April 15.