In 2024, you may have made substantial gifts to your children, grandchildren, or other family members as part of your estate planning. Or maybe you just wanted to help those close to you with some financial support.
Whatever your motivation for making a gift, it’s important to know if you’re required to file a gift tax return. Many gifts require a return even if you don’t owe any tax. There are occasions when it may be beneficial to file a return even though it’s not required.
Gift Tax Filing is required
Generally, you’ll need to file a gift tax return for 2024 if you made gifts during the year:
- That exceeds the $18,000-per-donee annual gift tax exclusion (other than to your U.S. citizen spouse),
- That exceeds the $185,000 annual exclusion for gifts to a noncitizen spouse,
- When you wish to elect gift splitting with your spouse to take advantage of your combined $36,000 annual exclusions,
- To a Section 529 college savings plan and want to accelerate up to five years’ worth of annual exclusions ($90,000) into 2024,
- Of a future interest, such as remainder interest in a trust, regardless of the amount.
Filing isn’t required
There is no requirement to file a return if your gifts consist only of annual exclusion gifts, present interest gifts to a U.S. citizen spouse, qualifying educational or medical expenses paid directly to a school or health care provider, and political or charitable contributions.
If you transferred difficult-to-value property, such as artwork or interests in a family-owned business, filing a gift tax return may be prudent even when not required. Adequate disclosure of the transfer in a gift tax return starts the statute of limitations, which generally prevents the IRS from challenging your valuation more than three years after you file.
What is the deadline?
Gift tax returns have the same filing deadline as your income tax return. For 2024 returns, it’s April 15, 2025 (or October 15 if you file for an extension). However, if you owe gift tax, the payment deadline is April 15, regardless of whether you file for an extension. Otherwise, you’ll incur penalties and interest.
If you have questions about filing a gift tax return or need professional tax preparation services in Boca Raton or elsewhere in Palm Beach or Broward Counties, call us today.