Reminder – Due Date for
Federal Gift Tax Returns Approaching
The purpose of this post
is to advise you that you may be required to file a Federal gift tax return
(IRS Form 709). If you made a gift during 2018, the below summary may be
critical to your tax planning.
The due date for a 2018
gift tax return is April 15, 2019, the same due date as your 2018 individual
income tax return. This date can be extended by extending the time to file your
individual income tax return using Form 4868 or Form 2350. This due date can
also be extended by filing a Form 8892 to request an automatic 6-month
extension if you do not request an extension for your individual income tax
return. However, neither of these methods will extend the time to pay gift or
GST taxes due.
Outright
Gifts of Cash or Property
All gifts of cash or
property (in excess of $15,000) to an individual other than a spouse requires a
gift tax return. As a result of the gift, your lifetime estate and gift tax
exemption will be reduced by the value of the gift that exceeds the $15,000.
However, no gift tax will be due with the return unless you have fully used
your lifetime estate and gift tax exemption.
Gifts
of Cash or Property in Trust
When you gift cash or
property to a trust, including a life insurance policy or premium payments to
be made on a life insurance policy, you are making a gift to the trust’s
beneficiaries. If the gift to the trust’s beneficiaries does not exceed $15,000
per beneficiary, and Crummey notices are properly used, a gift tax return may
not be required unless the trust is structured as a generation-skipping
transfer (“GST”) tax trust. If a gift is made to a GST trust, it may be
advisable to allocate the donor’s GST exemption to the trust. While this
allocation is automatic, it is advisable to either opt out of the automatic
allocation rules for record-keeping purposes, or, file a return showing the
allocation of the GST Exemption. If a gift to a trust exceeds $15,000 per
beneficiary, a gift tax return is required to be filed.
Most CPA’s are willing
and able to prepare gift tax returns. However, many prefer not to due to the
complex rules that apply to the allocation of GST exemption and other special
disclosures. Due to such complexities, we prefer to review all gift tax returns
prepared by our client’s accountants to ensure they align with your estate
planning goals.
If you have gifted cash
or property in excess of the filing threshold during 2018, please do not
hesitate to contact our office should you need assistance with the preparation
or review of a gift tax return.