How do U.S. Gift Taxes Work? IRS Form 709 Example

More Form 709 Tutorials:
Simple Example for Cash Gifts 2023: • IRS Form 709 (Gift Tax...
Real Estate Gifts: • IRS Form 709 (Gift Tax...
Gift of Publicly Traded Stock: • IRS Form 709 (Gift Tax...
Section 529 Plan Contributions: • IRS Form 709 (Gift Tax...
Charitable Contributions: • IRS Form 709 (Gift Tax...
Split Gifts Married Couples: • IRS Form 709 (Gift Tax...
Prior Period Gift Reconciliation: • IRS Form 709 (Gift Tax...
Have you heard that the U.S. federal government taxes gifts? Believe it or not, you might have to report gifts on a federal tax return if the fair value exceeds certain amounts during the year.
Generally, the donor is required to file all gift tax returns and pay any potential gift taxes. The recipient of the cash or property is not responsible for any gift taxes unless certain exceptions apply (e.g., gifts from non-U.S. persons).
U.S. individuals are allowed an annual gift exclusion of up to $15,000 for the 2020 and 2021 tax years. Any gifts over this amount must be reported.
For a larger database of tutorials, please visit our website and search for your question:
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DISCLAIMER: The information provided in this video may contain information about tax, financial, and legal topics. Such materials are for informational purposes only and may not reflect the most current developments. These informational materials are not intended and should not be taken as tax, financial, or legal advice. You should contact an advisor to discuss your specific facts and circumstances. Self-help services may not be permitted in all states or jurisdictions. The use of these materials does not create an attorney-client or confidential relationship. This video does not include information about every topic or issue related to these informational materials.
#Form709 #IRS #GiftTax

[@ChristaMurray]

Oh my goodness. Life saver! What a monster of form for not having to pay any taxes. 😅Thanks for posting this!

[@marygaus]

SUPER helpful, Jason. I tried reading the IRS documentation and well as other Google sites to understand the difference between the exemption amount and credit amount. Your video made it clear instantly. And I think my accountant failed to deduct the standard annual gift tax exclusion from my total gift amount as you highlight at timestamp 7:50. So thank you for that little jewel. This is the best 11:27 minutes on this topic on KZbin.

[@jaimet.7475]

Thank you so much! This is my first time filing for this and I was just about to give up and pay for a preparer, but I stumbled upon your video and it made everything so much simpler.

[@blujay9191]

Clear and to the point. Exactly what I was hoping this would be. Thanks for taking the time and effort.

[@watercolorPatCP]

Agreed, You are a wonderful 'teacher'. Other videos by others were not helpful - this was wonderful! Thank you again!

[@JammyScribbler]

Thank you. This is fourth video I tried related to form 709 and yours is the first with a simple example. It is just what I was looking for! Good explanations as well.

[@kupsingh]

Thank you, Jason! Very informative and helpful tutorial. My eyes were crossing trying to read through the IRS form 709 instructions!

[@JasonDKnott]

You're welcome!

[@kelvingrillo621]

Thank you sir, I just finished my very first 709 form following your directions. Extremely helpful!

[@JasonDKnott]

Glad it helped!

[@iangshyuan]

This was extremely helpful, just needed something super straightforward and this video definitely helped!

[@JasonDKnott]

Glad it helped!

[@ronaldfeaster9530]

Great explanation on how the gift tax and exclusion works.

[@JasonDKnott]

Glad it was helpful!

[@corinnesigel9392]

You saved our grief. Great video, very descriptive. Thank you

[@JasonDKnott]

Thanks for watching!

[@larrylarsen918]

Thank You. This was clear and concise and extremely helpful

[@JasonDKnott]

Thanks for watching! Glad it was helpful

[@subbuilder3563]

I gave 700k NJ condo/parking to my son last year. Your video surely relieved my worries. Thanks.

[@JasonDKnott]

Glad it helped!

[@suzhang4497]

Very clear presentation! The example is very helpful! Thank you!

[@JasonDKnott]

Glad it was helpful!

[@kenstclair453]

This was great......I was a little confused before but this shows how to do it and really pretty easy. Thanks!

[@JasonDKnott]

You're welcome!

[@BillChecovich]

Agreed. First video that actually explained clearly how to fill out the form.

[@tomsouders1182]

Thank you for a clear explanation of the basic principles.

[@JasonDKnott]

Glad it was helpful! Thank you for watching!

[@mikemoore1537]

I just went solo (after 2 yrs as a preparer)...and my first client for TY2022 will require a 709...first Form 709 for me also. Thank you so much for walking through this.

[@JasonDKnott]

You’re welcome. I’m glad it was helpful

[@andycensus]

Thanks for the video, it helped explain how to complete the form.

[@JasonDKnott]

You're welcome!

[@robertdunn9407]

Very clearly explained. Thanks.

[@JasonDKnott]

You are welcome!

[@user-oe7xp1ht5r]

Thank you Jason for keeping it simple.

[@Reyvey]

Thank you. It was very helpful

[@JasonDKnott]

Glad it was helpful! Thank you for watching!

[@mervyngibson8968]

Wonderful presentation!!!

[@JasonDKnott]

Thank you. Glad it was helpful!

[@wdb047]

Thank you! Very instructive. And necessary, because the Form 709 instructions are not as clear as they should be.

[@tressashields9525]

Thank you so much! This helped me finish it.

[@davidjones5319]

Great Summary! Thank you

[@ronaldschilling3819]

What an informative video, excellent

[@JasonDKnott]

Glad it was helpful!

[@pinkpeachlake]

Thank you very much!

[@JasonDKnott]

You're welcome!

[@mandywong2154]

Thank you so much 😊

[@aprilstefanik1638]

Thank you!

[@JasonDKnott]

You're welcome!

[@samplerworker6803]

This has been really helpful. I was struggling with the difference between exemption amount and credit amount and your explanations answered that for me. Part of the problem for me is that I've seen the 11,700,000 referred to as both exemption amount and exclusion amount. Thanks.

[@JasonDKnott]

I'm glad it was helpful. Thank you for watching!

[@johnlucas8978]

@@JasonDKnott Can you pls explain again the difference between exemption amount and exclusion amount? Where does the $4.6 million values come from? Thanks!

[@kenstclair453]

@@johnlucas8978 There is a chart in the IRS instructions that lists both amounts for each year.......I don't really get the difference either.

[@johncyr3916]

thank you - this was helpful

[@JasonDKnott]

Glad it was helpful!

[@nusratlima964]

Excellent video

[@JasonDKnott]

Thank you very much!

[@abhilasha6220]

Very helpful 🙏

[@JasonDKnott]

Glad it was helpful!

[@user-gq7bk7ws5y]

super helpful thank you

[@hunterssze]

would be great if you can do an example on the giving the property to the kids.

[@michaelg8670]

Great video...Nice to see a simple example to explain a complex issue. I do have one question...Does one need to include Schedule B,C and D if there are no entries on those schedules? Again, thanks for sharing.

[@jimbochoo3316]

Awesome, thanks

[@angryslug1957]

Thank you, thank you thank you !!!!!!!!

[@omegaman123]

Thank you very much sir. This was an excellent tutorial. A couple of questions... (may seem obvious but I do not like to assume)...#1 does the form 709 get filed with the 1040-SR form (same envelope packet)? #2 if there were multiple cash gifts in year 2022, do I need to list each gift event separately, or just total all gifts into one entry (if so does the date of gift become an issue...can I use the first or last date of gift?)...#3 does gift tax apply when a person (non-spouse) is added to a bank account as joint account holder, but no cash transfer out of the account has taken place? TYIA!!!

[@susankelly8829]

Wonderful presentation and explanation. I now have an understanding of this form. If you file a joint return does the annual exclusion amount (15,000.00) in the reconciliation column becomew 30,000.00.

[@philipdamask2279]

It is not that easy. Your wife has to file a 709 also I think.

[@srdpham3677]

super helpful video. thanks for posting it. Question: if both my wife and I give our daughter an amount exceeding the exclusion, does each of us need to file 709 separately?

[@emilywelk7413]

So helpful thank you! Could I ask about one gift shared by two donees? If a house was transferred by Quitclaim to two individuals (both on new deed), is it proper to subtract 30,000 in total from the gift amount, with both people are listed on Form 709?

[@Csharpflat5]

Great explanation thanks I am gifting my brother 200k over 2 years….

[@JasonDKnott]

Glad to hear it was helpful. Thanks for watching!

[@teresamarks931]

Great instruction! Super clear presentation. Thank you!

[@JasonDKnott]

Glad it was helpful!

[@elliottdixon7403]

Thank you, your video was clear and helpful. However I think you made an error on your slide that clarifies who is responsible for the gift tax. Based on your explanation, your slide should have stated "One exception is gifts received FROM non-U.S. persons", but your slide says "One exception is gifts BY non-U.S. persons." John, a U.S. citizen, must report the gift because he received it FROM his aunt, a non-US citizen in Germany.

[@mediawow6917]

What about having the $2,000 covered by the lifetime exclusion?

[@SkywalkerPMs]

Saved me in 2024! Thanks!

[@jerrytisser8072]

Enjoyed the video. In my case zi am gifting 2 existing life insurance policies with total cash value of 160K and 70K basis into an Irrevocable Life Insurance policy that benefit my 3 sons after I die. I am a widower and assume this requires a gift tax return.

[@maddogmike504]

Can you explain the need for the Cost Basis (Col D on Schedule A, Part 1) as it seems the Market Value under Col F is what gets transferred for Gift Tax Computation purposes.

[@czap]

Very helpful, thanks! How do contributions to an irrevocable trust get listed on the form? I've read that the IRS treats them as a gift to the beneficiaries. Example: Parent puts 100K into an irrevocable trust with son and daughter as the eventual beneficiaries. Would they have item 1 (son) and item 2 (daughter) for $50K "cash" each on Part A? Or would they have Item 1 (Name of trust, "trust") for $100K? Or is nothing reported until the year the trust actually pays out, thereby completing the gift to the intended beneficiaries?

[@bt2463]

What goes in column D "adjusted basis of gift" in the scenario when the gift is a property, purchased for $x but with a current market value of $y? And going forward, what is the cost basis of the property for the new owner (the donee), assuming that at some point in the future the property will be sold? The property was never rented, so depreciation does not apply here.

[@BarbaraHastings]

Thank you for the video! I do have a questions on gift splitting with a spouse. Is this correct: If splitting 2 gifts of $30,000 with a spouse, does $60,000 go in "Total of Part 1, column H" and $30,000 on Line 1 of Part 4? This is how I am reading the directions, but it seems odd.

[@TuanNguyen-lr6xt]

thanks, if it's a one time over the 17K now, do you have to file this form every year OR only that year you gifted

[@scarsfrmgrindn8529]

When giving a gift trust from a trust in my own name to myself as the trustee for undo hardship, do I have to fill in gst area??

[@mrbigcat9]

Can you gift to the same person the maximum for that year and every year going forward with out filing a Form 709 Gift Tax Return?

[@paulw3495]

I'm struggling to figure out how to properly complete the Form 709 Schedule A Part 1 for a split (cash) gift to a son/daughter. Although this seems like a fairly common situation, I can't find much from the IRS or on the web about how to fill out the Form 709 Schedule A properly. Both parents fill out separate Form 709s. I think the parent giving the gift fills out the upper part of Form 709 Schedule A Part 1 and leave the lower part of Schedule A Part 1 blank (Gifts made by spouse ...). The second parent fills out his/her own Form 709 and leaves the top part of Schedule A Part 1 blank but fills in the lower part of Schedule Part 1 (Gifts made by spouse ...) with essentially the same information provided by the parent giving the gift. The IRS pamphlet "Instructions for Form 709" is somewhat cryptic, but I think what I propose above fits with what they are asking for. The numbers carry over to the subsequent parts of each form correctly with this approach. Is this the proper way to fill out the Schedule A? I only found one example of this case on the web, and I think the author completely butchered it (in my opinion). Thanks in advance.

[@bruceaalam6475]

@paulw3495 Hello, I have the exact question and same problem as you have! Not much info available on IRS website. Have you found any additional info about your question??

[@erik3026]

Thank you for the clear video. How do you make space for multiple donees and/or multiple items donated per donee? Is it a matter of using multiple Schedule A's?

[@angy7680]

Did you find an answer? I have the same question

[@erik3026]

​@@angy7680 Yes, I found fine print at the bottom left corner of Schedule A, "If more space is needed, attach additional statements". But no directions are given for the format for additional statements. But then I found www.cbsnews.com/htdocs/pdf/president_federal_709.pdf, see pages 5, 6, 11, and 12 of the pdf. Or google "obama gift tax form" if that link doesn't work.

[@teressia111]

I gave my daughter some land I owned to her. Estimated market value is 59,200 (on property tax statement), After subtracting 15,000 it comes to 44,200. Looking at the table for gift taxes, this would mean I would have to pay over 8,000 in gift taxes. Do you have any suggestions on what I can do to not have to pay this gift tax?

[@wizard8715]

If a W-4 & W-2 stubs are gift and estate (Class 5)filings? Why am I using a 1040 income (class 2)form since I have a 4.5 million dollar exclusion in this 709 form? Please explain?

[@georgeyoungapts]

Thankj you for this presentation. I do have a question that I do not think was covered in the video. How is property gifted to an Irrevocable Intentionally Deficient Trust Trust valued for completing form 709? My wife and I gifted rental properties prior to the passage of Prop 19 on Feb 3, 2021 and the property (and beneficaries of the Trust) live in CA.

[@JasonDKnott]

Thanks for watching! I think you mean either an Intentionally Defective Irrevocable Trust (IDIT) or an Intentional Defective Grantor Trust (IDGT)? It's hard to answer this in the abstract without knowing your full tax position. If you gift property to one of these trusts, the matter is much more complicated than can be answered here, and the Form 709 should be completed by a CPA or tax attorney. If you need assistance preparing the 709, please contact our office at: [e-mail]

[@lincolnemail]

Excellent presentation, Thank you for sharing. Would a 529 College contribution Superfunding (git of$60,000) to their newborn be reported the same way in Schedule A part 1? I am assuming on the Schedule A line B should be checked and the statement attached. The exclusion amount should be $60,000 or 15,000 for the child for 2021?. Thank you for considering to respond

[@lincolnemail]

I have learned and figured out how I would have to report. If it helps anyone, I will allocate $12,000 as a gift for 2021 and the remaining 48,000 to be allocated over the next 4 years for which no reporting is required. The exclusion would be the full amount of the gift which is $12,000. Thank you!

[@sandrab.5065]

Do you have an example for a gift of a gold ring or jewelry to a child when donor ( blood relative ) is still living? How do one access cost value? Thanks.

[@kimkotanaku7490]

Do you Attack copy 709 to your 1040 . Put Gift Equity on Schedule D Line 10 Box F & Put Gift in G of your 1040 also 8949 (g) Amount of adjustment and Send your 1099 S

[@GoodComedian2011]

If each tax payer has lifetime exemption of 11 580 000, why did you write in the form 4 577 800 in the line 9? Thanks

[@UNKNOWN_YUKI]

I gave my mum 50k in 2021, and this is first time I give someone cash or property but I never know I should file 709 until I happened to watch your video here. In this case, do I need to pay any gift tax?? Will I have penalty from irs for late file 709? If so, how much they will charge? Thanks

[@michaelg9359]

Any way you could do an example of filling one out for giving a gift of over $18000 to a child? THANKS --

[@sunanyu5451]

Thank you so much for your video and it is really helpful. And I have a question for first slide listing 2, A Green Card holder (permanent resident) is consider as US. person? If a US Citizen receive a gift by a green card holder, who will be responsible for reporting gift to IRS?

[@JasonDKnott]

The green card holder is a U.S. tax resident, so the green card holder is responsible for reporting the gift to a U.S. citizen.

[@ozangozubuyuk7489]

@@JasonDKnott If the the person I gift is not U.S. citizen or basically not U.S. tax resident?

[@jackmasonen]

question: on line 7 Part 2 "Tax Computation", why is it only half of the exemption $11.58M ?

[@watercolorPatCP]

I noticed in your fees that you charge $500 to do a Form 709. Yikes. I wish I could find someone that would just 'check' my form (5 minutes?) and charge a nominal fee.

[@himanshuk2873]

Hi Jason, do I have to file form 709 if I am living in the US on a non-immigrant visa and do not intend to live here permanently? I made a gift of $30,000 to my father, who lives abroad and is a non-US citizen. Also, I am considered as a non-resident alien for income tax purposes. Is the definition of resident the same for gift tax purposes as that for income tax purposes?

[@marshaoberlin7749]

Thank You this is very helpful. My understanding is you don't file this form 709 with your Tax Return but separately . If that is the case and I file my tax return electronicly....then I would be mailing this form in right? Is there a fee for filing form 709?

[@JasonDKnott]

That is correct, you separately file the Form 709 from your personal tax return. As of 2022, the Form 709 must be paper filed.

[@immabadboy3110]

Very helpful instructions. Thank you. Can you take it a step further and extend the example to include a generation skipping tax item in a follow up video. Part D is losing me.

[@JasonDKnott]

Thanks for watching! We will add a video that covers GST issues so stay tuned!

[@jimm5966]

thanks, a complicated form made simp;e

[@JasonDKnott]

I’m glad I could help

[@quentinmitchell225]

So if an individual have this million dollar lifetime exemption, and they never made that much credit working, but are being placed in prison for owing taxes, how can that be when they have this exemption?

[@JasonDKnott]

The Form 709 covers gift taxes which is a separate issue from income taxes.

[@javierr5230]

Why are lines 7, 9, and 11 set at 4-million if the lifetime exception is 11-million? Shouldn’t one of those lines be 11-million?

[@JasonDKnott]

The lifetime exemption is not reported on those lines, you report the applicable credit amount for the year. Have a look at the Form 709 instructions and the table labeled "Table of Basic Exclusion and Credit Amounts"

[@mnphoneemail113]

Nicely done. As you are a CPA, I would guess that you agree that Form 709 gets very complicated beyond your example and the instructions are poorly written. How about an example of husband and spouse splitting a gift of $100,000 to a daughter with a Direct Skip of $50,000 to a Grandson? For an added challenge, assume the gifts are from Community Property. I.e. the donors live in a Community Property state (Arizona).

[@JasonDKnott]

Yes absolutely! Gift taxes are incredibly complicated, which is why this example covers only the most basic fact pattern. If there are gifts to a skip person, gifts of closely held business interests with lack of marketability and minority interest discounts, gifts to foreign persons, etc., then I would never recommend someone complete a Form 709 on their own. Always consult with a professional.

[@user-gq7bk7ws5y]

in your video in Part 2 - Tax computation how can line 15 be zero when it says Do not enter less than zero Trying my best to understand this timestamp 5:43

[@tudorguy1509]

Hi Jason. Great video. But you lost me on line 7: Applicable Credit Amount. If the lifetime exemption is almost $12 million, how did you get $4,577,800? Thanks.

[@markl1473]

Same here. Everything was going along smoothly until this part. I don't get it.

[@markl1473]

OK. I figured it out. Line 7 is not the $12 million lifetime exemption. Line 7 is the amount of tax you would owe on that $12 million gift had there been no lifetime exemption. Because we have the lifetime exemption, we use that number (4,577,800 in this case) against the tax we would have otherwise had to pay (in this case $360). If the person in this case had gifted over 12 million, his/her tax would have exceeded that $4,577,800 and they would have had to pay tax on the difference. Also, for tax year 2022 the amount you put on line 7 has changed to $4,769,800. You can see this in the IRS form 709 instructions page 20 where it says: "If you are not eligible to use a DSUE amount from a predeceased spouse, or Restored Exclusion Amount on taxable gifts made to a same-sex spouse, enter $4,769,800 on line 7." I hope this helps!

[@gre8teric]

I donated 20k each gift of equity to my son and daughter in law . Do I need to fill out 2 separate 709 or can I use one form with both names on it. Thank you.

[@JasonDKnott]

A donor only needs to file one Form 709 to report all of the taxable gifts during the year

[@the92r]

do we need to include documentation of anything larger than $15000? like if we gifted 50k to a family member, does the IRS need docs to support the transfer?

[@JasonDKnott]

It depends upon the type of gifted property. For cash gifts, you generally just report the cash amounts and nothing further is required. However, other types of gifted assets require a full description of the transferred property and also attachments of qualified appraisals by third party appraisers. If you gift anything other than cash, I highly recommend having a qualified tax advisor prepare the Form 709. If the Form 709 does not adequately disclose the gift to the IRS' standards, the statute of limitations never starts, and the tax year remains open for examination forever by the IRS.

[@the92r]

@@JasonDKnott Thank you for your quick response, jason. Appreciate all you do

[@suzhang4497]

@@JasonDKnott Very clear and helpful presentation! Really appreciate your efforts. For gifted stock, will I need to include any documentation ? Thanks.

[@bethdxn2236]

How does the splitting work for spouses? We gave ours son $75K in 2021 to help with a house down payment. Is there an advantage to splitting between the two of us. Thanks

[@JasonDKnott]

Gift splitting for spouses is generally the best approach because each spouse has their own lifetime exemption. Both spouses must file a Form 709 to make the splitting election.

[@user-gq7bk7ws5y]

got it less than zero so zero is ok so much to take in

[@quentinmitchell225]

It’s important to me to know who taught you how to fill that form out? I’m asking because there are a lot of CPA’s and tax professionals that were taught to mislead the public. It’s kind of like reading the Bible: people have there own perspective about what the Words mean.

[@JasonDKnott]

I am a licensed CPA and tax attorney in Florida, and I have over 12 years of experience assisting clients with these filings. Our mission to help the public remain compliant with all tax laws, and save as much in tax as legally possible each and every year.

[@judyspeedy6826]

How did you get the 4,577,800 on line 7 and 9?

[@JasonDKnott]

See the Form 709 instructions and the table labeled "Table of Basic Exclusion and Credit Amounts" for the 2021 tax year.

[@judyspeedy6826]

@@JasonDKnott Thanks for your help!

[@johnmills4628]

if i take tax free money from a roth account and gift $100,000 to my son from the roth (taxes have been paid on) do I need to do a gift tax?

[@JasonDKnott]

Yup, you should file a gift tax return anytime you gift property to another person that exceeds the annual exclusion during the year. For 2022, the annual exclusion is $16,000 per person. If you gift more than $16,000 to your son, you should report it on a Form 709. If you are married, you and your spouse may be eligible to split the gift.

[@raymondjoseph7177]

So i cant seem to find an answer. If i make 100k and gift my child 15k. Am i taxed at 100k income or 85k? Thanks very informative video.

[@JasonDKnott]

No, these are different issues. Taxable gifts in the US are computed using after tax dollars. In other words, if you make 100k in income, you still pay tax on the 100k in earnings. Once you have your income after paying taxes to the IRS, if you gift cash or property to your child, that may be a taxable gift, if the amount exceeds the annual gift tax exclusion.

[@christiangruhler6929]

What happens if the form 709 is not filed?

[@JasonDKnott]

The statute of limitations never starts to run. There are also late filing penalties and interest owed on the gift taxes due.

[@christiangruhler6929]

@@JasonDKnott Thanks for the reply. If we are talking about just one property that my mother and I are joint tenants on (value 650k) and she passes without filing the 709, looks like there might be just late filing fees?

[@kevin-jm3qb]

God damnit..... i hate the IRS 🤦

[@JasonDKnott]

They like to tax everything...

[@kevin-jm3qb]

@@JasonDKnott haha yea, this $30 trillion national debt isn't going to pay itself. Had a question. My father has 3 million in capital and wanted to know if we will end up paying a gift tax If we wanted to transfer 100k per year

[@LisaAHill]

God bless you!

[@liyakhatali9643]

Thank you sir, I just finished my very first 709 form following your directions. Extremely helpful!

[@JasonDKnott]

Glad it helped!

[@emmabbyreborns341]

Thank you. Yes, this was very helpful. God bless.

[@JasonDKnott]

Glad it was helpful!