Internal Revenue Service, IRS Form 709 records asset transactions subject to the gift tax and specific GST taxes during a taxpayer's lifetime. This form details any taxable gifts you have given others throughout your lifetime, including financial or tangible donations like real estate. When giving property to a beneficiary who is at least 371/2 years younger than the gift donor and who is not related to the donor by marriage, adoption, or blood, Form 709 is also used to distribute lifetime generation-skipping tax deductions.

If you gave a person gifts worth more than $17,000 in 2023 or $16,000 in 2022, you should submit Form 709, according to the IRS. Each year you give a taxable gift, you must submit IRS Form 709 along with your tax return; however, just because you file this form doesn't indicate you'll owe gift taxes or GST taxes.

The generation-skipping transfer (GST) tax refers to an additional tax levied on a property transfer that stutters a generation.

Who Must File Form 709

You are liable to pay all gift taxes when you give someone money. However, the recipient is not responsible. You must submit Form 709 to report gifts of cash, properties, or other resources offered to someone in a specific tax year.

Yet, there are several circumstances in which cash gifts are exempt from the gift tax. They consist of the following:

• Gifts that are subject to the annual exclusion cap
• Gifts for your partner
• You pay for someone else's education or medical expenditures.
• Gifts are given to a political group for use.

Education or medical bills must be paid directly to the invoice to avoid paying the gift tax. For instance, you would need to pay the fees directly to the institution to assist a grandson with college costs. If, however, you gave your grandson the cash to cover their education, that would be considered a taxable gift. The same applies if you are covering medical costs. To minimize gift tax repercussions, you must pay the money to the healthcare professional directly.

What can be considered a Taxable Gift?

For reporting purposes, IRS defines a gift as any donation to someone, directly or indirectly, when full consideration (defined in money or money worth) isn't received in return.

Examples of situations where gifts may be taxable include:

• Gifts of cash directly to students to help with school expenses.
• Gifts of property or other assets to someone.
• Gifts of down payment to an adult child to support them in purchasing a home
• Cash is deposited into a 529 plan college saving account on behalf of a recipient other than your spouse or yourself
• Funds are deposited into a will.
• Forgiving loans, you've given to others.

Lifetime and Annual Exclusions

For 2023, the annual exclusion cap is $17,000. For married people who file a joint return, this cap doubles to $34,000 ($32,000 in 2022). If you are married and have three kids, you and your spouse may jointly give each $34,000 in 2023 without exceeding the exclusion amount because the restriction applies per recipient. Gift splitting is what it's called, but you can only use it if you and your partner file a combined tax return.

A lifetime gift tax exclusion is also available. In 2023, it is $12.92 million, which was $12.06 million in 2022.

How can you file Form 709?

During any tax year, you give a taxable gift; you must submit Form 709 unless you qualify for one of the abovementioned exemptions. To finish this form online, you must file your taxes electronically via tax prep software. One of the few tax forms that cannot be electronically submitted is Form 709, which you can print out and mail to the IRS.

Form 709 is a five-page document with the following sections:

• Information about yourself
• Financial gifts you've made
• GST information.

Form 709 is a yearly return. Your tax return form must be submitted by the annual submission deadline, including Form 709. The yearly form submission deadline is April 15 for most tax years (April 18, 2023). Generally, you must submit Form 709 by April 15 of the year after you made the gift, but not after January 1.

You can apply for a tax extension if you anticipate requiring more time to complete your return. If you file a tax extension, you have until October 15 to complete your return. Filling out IRS Form 8892 will allow you to obtain a six-month deferral for submitting Form 709.

How to Download Form 709

On the IRS website, you can download Form 709. To record gift taxes and GST tax exemptions on your tax return, download this form, which is available for free download. Although the form is five pages’ document, depending on what details you're submitting for the year, you may only need to fill out some parts.

Bottom Line

For gifts given in addition to the yearly allowed exclusion, taxpayers must record them on Form 709, which must be filed with their tax return. The individual making the gift must report it and pay the tax. By the tax reporting date of the year that follows the year that a taxable gift is given, usually April 15, you must submit Form 709.