Why do you have to file a gift tax return?

The purpose of filing a gift tax return is to keep a running total of gifts you have made during your lifetime, so that the IRS knows if or when you exceed your lifetime exclusion.

What happens if gift tax return is not filed?

If you fail to file the gift tax return, you’ll be assessed a gift tax penalty of 5 percent per month of the tax due, up to a limit of 25 percent. If your filing is more than 60 days late (including an extension), you’ll face a minimum additional tax of at least $205 or 100 percent of the tax due, whichever is less.

Who is responsible for filing a federal gift tax return?

Who Uses Form 709? The recipient of a gift isn’t liable for this tax. The donor is responsible for paying the gift tax, and they must complete and file Form 709 with the IRS if their gifts aren’t exempt.

When do you need to file a gift tax return?

Generally, you must file a gift tax return for 2018 if, during the tax year, you made gifts: That exceeded the $15,000 per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse),

Do you have to file tax return for gift splitting?

In general, if you and your spouse elect gift splitting, then both spouses must file his or her own individual gift tax return. However, only one spouse must file a return if the requirements of either of the exceptions below are met.

How are gifts taxed for the donor?

However, for appreciated property received, the tax basis in the property carries forward from the donor, so if appreciated property is received and then sold right away, a taxable gain could be triggered. How are gifts taxed for the donor?

When does a gift tax return trigger an audit?

For example, if you make annual exclusion gifts of difficult-to-value assets, such as interests in a closely held business, a gift tax return that meets “adequate disclosure” requirements will trigger the three-year limitations period for audits.