UPDATE – 2019 Gift Tax Return Due July 15

As of March 27, 2020, the IRS is allowing individuals three more months to report taxable gifts, adding to the growing list of tax relief measures the agency has already provided to address the COVID-19 pandemic. Any person owing federal gift tax or generation-skipping transfer tax on April 15 will now have until July 15 to make that payment, free of interest or penalties. The due date for filing Form 709 to report gifts has also been pushed back.

If you made large gifts to your children, grandchildren or others last year, it is important to determine whether you are required to file a 2019 gift tax return. In some cases, even if not required to file one, it may be beneficial to do so anyway.

Who must file?
Generally, you must file a gift tax return for 2019 if, during the tax year, you made gifts:

  • that exceeded the $15,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse)
  • that you wish to split with your spouse to take advantage of your combined $30,000 annual exclusion
  • that exceeded the $155,000 annual exclusion for gifts to a non-citizen spouse
  • to a Section 529 college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($75,000) into 2019
  • of future interests — such as remainder interests in a trust — regardless of the amount
  • of jointly held or community property

Keep in mind that you will owe gift tax only to the extent that an exclusion does not apply and you have used up your lifetime gift and estate tax exemption ($11.4 million for 2019). As you can see, some transfers require a return even if you do not owe taxes.

Who might want to file?
No gift tax return is required if your gifts for 2019 consisted solely of gifts that are tax-free because they qualify as:

  • Annual exclusion gifts
  • Present interest gifts to a U.S. citizen spouse
  • Educational or medical expenses paid directly to a school or health care provider
  • Political or charitable contributions

But if you transferred hard-to-value property, such as artwork or interests in a family-owned business, you should consider filing a gift tax return even if you are not required to. Adequate disclosure of the transfer in a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file.

If you are not sure whether you must (or should) file a 2019 gift tax return or if you need to file an extension, please contact us.