Instructions for Filling Out Form 709

This document offers a comprehensive guide to completing Form 709, the United States Gift (and Generation-Skipping Transfer) Tax Return for the year 2023. It covers various aspects, including determining filing requirements, identifying reportable gifts, gift splitting, and calculating taxes due on transfers subject to federal gift and certain generation-skipping transfer (GST) taxes.

In this article, we'll provide information on Form 709 and a step-by-step guide on how to fill it out, ensuring accuracy and compliance with tax regulations.

What is Form 709?

Form 709 is the United States Gift (and Generation-Skipping Transfer) Tax Return used to report transfers subject to federal gift and certain generation-skipping transfer (GST) taxes, as well as to calculate any tax due on those transfers. This annual return is necessary for gifts that exceed the annual exclusion limit. It includes sections for reporting direct skips, indirect skips, and other transfers that might be subject to GST tax.

Additionally, Form 709 allows for the allocation of the lifetime GST exemption and addresses the portability of the deceased spousal unused exclusion (DSUE) amount. The form provides specific instructions on gift splitting, computing taxable gifts, determining applicable deductions and credits, and guidance on the treatment of digital assets and the restored exclusion amount for same-sex spouses.

Who Must File Form 709?

Individuals who need to file Form 709 include U.S. citizens or residents who gave gifts totaling more than $17,000 (other than to their spouse) in 2023, those who gave gifts of future interests regardless of the amount, and those who wish to split gifts with their spouse.

Additionally, individuals who transferred property partly to their spouse and partly to third parties (if the interest transferred to third parties is ascertainable at the time of the gift) must file. Donors responsible for paying the gift tax, including situations where the donor does not pay the tax and the recipient may have to pay it, and executors of a donor who died before filing a return for gifts made in 2023 are also required to file Form 709.

Form 709 Tax Filing Deadlines and Due Dates

• No earlier than January 1 but not later than April 15 of the year after the gift was made.
• If the donor died during 2023, the due date is the earlier of the due date (with extensions) for filing the donor's estate tax return or April 15, 2024.

Form 709 Late Payment Penalty

If Form 709 is filed late or the tax payment is delayed, penalties may be assessed based on the amount of tax due, the length of the delay, and other factors. For precise penalty calculations, it's recommended to refer to the IRS guidelines or consult a tax professional.

Step-by-Step Instructions for Form 709

Step by Step Instructions for Filling Out Form 709:

1. Determine Filing Requirement: Check if you need to file Form 709 based on the gifts you made during the year.
2. Identify Reportable Gifts: Determine which gifts you made during the year are reportable on Form 709.
3. Decide on Gift Splitting: If married, decide whether you and your spouse will elect to split gifts for the year.
4. Fill Out Part 1 - General Information: Complete lines 1 through 19, providing general information about the donor and any gifts made.
5. List Each Gift on Schedule A: Depending on the nature of the gift, list each gift on the appropriate part of Schedule A (Parts 1, 2, or 3).
6. Complete Schedules B, C, and D: Fill out these schedules if applicable, based on prior gifts, DSUE amounts, and GST tax computation.
7. Compute Taxable Gifts and Tax Due: Complete the computation of taxable gifts and any tax due on the gifts listed on Schedule A.
8. Sign and Date the Return: The donor must sign and date the return. If a paid preparer completed the form, they must also sign.
9. File the Return: Submit the completed Form 709 to the IRS by the filing deadline.

How to Submit Form 709

To submit Form 709, complete the form according to the specific instructions provided for each part, including general information, computation of taxable gifts, and computation of GST tax if applicable. Calculate any gift or GST taxes owed, and apply any applicable credits or exclusions. Ensure that you (and your spouse, if applicable for gift splitting) sign and date the form. Submit Form 709 by the due date (April 15 of the year following the gift, unless an extension is granted) to the Department of the Treasury, Internal Revenue Service Center, Kansas City, MO 64999, or if using a private delivery service, send it to Internal Revenue Service, 333 W. Pershing Road, Kansas City, MO 64108. Retain a copy of the filed Form 709 and all relevant documentation for your records.

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