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Understanding Form 709

So, you’ve given a big gift—maybe helped your kid with a house down payment or passed on a family heirloom—and now you’re hearing about something called Form 709. Don’t worry, it’s not as complicated as it sounds! Form 709 is just the IRS’s way of keeping tabs on gifts that go beyond the annual limit. Think of it as a way to make sure everything’s squared away, tax-wise, for the future. We’re going to break down the gift tax return, Form 709 instructions, how to file the gift tax form and the IRS gift exemption.

Table of contents

Key Takeaways:...Read more

What is Form 709?...Read more

What counts as a gift?...Read more

What is the deadline for the gift tax return?...Read more

Form 709 instructions...Read more

Filing Form 709...Read more

Key Takeaways:

Form 709 has to be filed by gift givers, not receivers.
The gift tax return due date is April 15th, but you can file for a six-month extension with Form 8892.
Form 709 has to be e-filed.

What is Form 709?

Form 709, officially known as the United States Gift (and Generation-Skipping Transfer) Tax Return, is a gift tax form used by individuals who make substantial gifts. If you give someone a gift that exceeds the annual gift tax exclusion amount ($17,000 per recipient for 2023, $18,000 for 2024), you’re required to report it using Internal Revenue Service Form 709. This gift tax return isn’t just for cash gifts; it also applies to property, stocks or other assets you might transfer. You might be wondering, “Do I actually have to pay a tax on gifts?” The good news is that for most people, the answer is no. Even though you need to report gifts that exceed the annual limit using Form 709, you likely won’t owe any gift tax unless your lifetime gifts surpass the federal estate and gift tax exemption, which is quite high ($12.92 million per person for 2023, $13.61 million in 2024). The Internal Revenue Service Form 709 also covers something called Generation-Skipping Transfers (GST). If you make a gift to someone who is two or more generations younger than you, like a grandchild, it might fall under the GST tax rules, and this gift tax form helps the IRS track those as well.

Infographic entitled Form 709 describing the tax form.

What counts as a gift?

When it comes to taxes, a “gift” isn’t just something you give someone on their birthday. For tax purposes, a gift is anything of value that you transfer to another person without expecting to get something of equal value in return. This can include obvious things like cash or checks, but it also extends to property, stocks and even forgiving a debt someone owes you. Imagine you decide to give your sibling $25,000 to help them start a business. Since this amount exceeds the IRS gift exemption of $18,000 per recipient for 2024, the excess $7,000 is considered a taxable gift. This means you’d need to report it using the gift tax form known as IRS Form 709. However, it’s not just large sums of money that count. If you transfer the title of your vacation home to someone, give away stock shares or even forgive a loan, these can all be considered gifts. However, not everything you give counts as a taxable gift. For example, paying someone’s tuition or medical bills directly to the institution or healthcare provider isn’t considered a gift and doesn’t need to be reported. The key thing to remember is that if you’re giving away something of significant value and aren’t getting anything back in return, there’s a good chance the IRS will see it as a gift, and you might need to report it using Internal Revenue Service Form 709.

What is the deadline for the gift tax return?

The deadline for filing your gift tax return, which is reported on Form 709, is the same as the due date for your personal income tax return—April 15th of the year following the year you made the gift. So, if you gave a gift in 2023 that exceeds the annual IRS gift exemption, your gift tax return due date is April 15, 2024. If April 15th falls on a weekend or holiday, the gift tax return due date is extended to the next business day. If you’re not ready to file by then, you can request an extension for your income tax return, which automatically extends the deadline for your gift tax return as well. This extension gives you until October 15th to file both your tax return and Form 709. As with most tax extensions, an extension gives you more time to file, it doesn’t extend the time to pay any taxes owed. If you expect to owe gift tax, it’s wise to estimate and pay the amount by the original April deadline to avoid interest and penalties.

Form 709 instructions

Here’s how to file the gift tax return. First off, figure out if you actually need to file Form 709. You’ll need to do this if you’ve made any gifts over the annual IRS gift exemption amount. Next, decide which gifts you need to report. If you’re married, you’ll also need to decide if you and your spouse want to split the gifts for the year. This means you’ll each report half of the total gifts on your forms. Start by filling out lines 1 through 19 in Part 1—General Information. This is where you put down your basic details and those of your spouse if you’re filing jointly. Now, move on to Schedule A. List each gift in Part 1, 2, or 3, depending on the type of gift. If your gift falls under Generation-Skipping Transfer (GST) rules, use Part 2 or 3 of Schedule A. Complete Schedules B, C and D as needed. Schedule D is especially important if the gift was reported in Part 2 or 3 of Schedule A, as it helps with calculating any tax you might owe. Don’t forget to fill out Schedule A, Part 4, for any extra details about the gifts you’ve listed. Part 2—Tax Computation is where you work out any gift tax that might be due. Finally, sign and date the form and file it by the gift tax return due date. Make sure to keep a copy of your completed IRS Form 709 for your records and mail the original to the address listed in the instructions. If you’re feeling unsure, you can find the Form 709 instructions on the IRS website, or you might want to consult a tax pro to make sure everything’s done right.

Filing Form 709

If you’ve made a taxable gift, you’ll need to file IRS Form 709 for that year, unless your gift falls under an IRS gift exemption. Unlike many tax forms, you can’t e-file Form 709; it has to be printed and mailed to the IRS. Form 709 is five pages long and covers:

Your personal info
Details about the gifts you made
Information on any generation-skipping transfers.

You’ll need to get Form 709 in by April 15, which is the same deadline as your regular tax return. This means you should file it between January 1 and April 15 of the year after you made the gift. If you think you’ll need more time to get everything together, you can file for an extension. This gives you until October 15 to finish up Form 709. Just remember to complete IRS Form 8892 to request this six-month extension. FlyFin’s expert CPAs provide unlimited support on the app. They can help with Form 709, gift tax calculations, Form 709 instructions and the IRS gift exemption. They also prepare and file your state and federal returns.

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