Due to the generous $11.58 million lifetime gift tax exemption for 2020, fewer people are subject to federal gift taxes and many are wondering if they still need to file a gift tax return. Well, if your wealth is within the exemption amount, the answer is no. However, there are a few exceptions where it is necessary and even beneficial to file a “United States Gift (and Generation-Skipping Transfer) Tax Return.” (Form 709).
It is assumed that all transfers of property by gift are taxable, but there are exceptions. Examples of these nontaxable transfers that do not need to be reputed are:
- Direct payments of qualifying medical or educational expenses on behalf of an individual
- Deductible charitable gifts
- Gift to one’s U.S.-citizen spouse, either outright or to a trust that meets certain requirements
- Gifts to one’s noncitizen spouse within a special annual exclusion amount
- Gifts of present interests within the annual exclusion amount
- Amount currently at $15,000 per donee
See To File or Not to File? A Gift Tax Return Doesn’t Always Have to Be Filed, Insight on Estate Planning, May 12, 2020.