Form 709 - U.S. Gift Tax Return

             Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, is used for the purpose of reporting any transfers that are subject to the federal gift tax and specific generation-skipping transfer taxes.  The Form 709 is also used to compute the tax due, if any, on such transfers.  Another use for Form 709 is to allocate the lifetime exemption for GST to property which was transferred during the lifetime of the transferor.  Any gift and GST taxes are required to be figured and filed on a calendar year basis.  One Form 709 would be filed for each year, listing all reportable transactions that occurred during that year. 

             A citizen or U.S. resident is required to file a gift tax return in the following circumstances, even if no tax is actually due.  One situation is where the taxpayer during the year gave gifts to any one person with a total amount of greater than $12,000.  Another situation where a gift tax return is required is in the case where certain gifts, which are called future interests, are not subject to the $12,000 annual exemption.  In this situation, Form 709 is required although the gift is under $12,000.  It is important to note that a married couple cannot file a joint gift tax return.  Each spouse must file his or her own Form 709.  A gift tax return is also required in order to split gifts with your spouse, no matter what the amount is. 

             Another case where a Form 709 is required is when a gift of community property is made.  In this situation, the gift is considered to be made half by each spouse, so each spouse is again required to file their own Form 709.  The same requirement applies when a married couple has gifted property they held as joint tenants or tenants by the entirety.  Since only individuals are required to file gift tax returns, when a trust, estate, corporation, or partnership makes a gift, it is the individual beneficiaries, stockholders, or partners who would be liable for any gift or GST taxes.  In the case where a donor fails to pay the gift tax, the person who received the gift might end up being required to pay the tax.  Finally, in the case where a donor dies before a return is filed, it is up to the executor to file Form 709.

             It may be easier to state the instances when a return does not need to be filed, since they are fewer.  If the taxpayer did not make any gifts to his or her spouse during the year, the taxpayer did not give a gift or gifts of more than $12,000 to any one person, and any gifts the taxpayer did make were of present interests, a Form 709 would not be required to be filed.

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