Do I File a Gift Tax Return for Gifts Over $17,000?
Understand the reporting requirements for large financial gifts. Learn how the tax system works to track gifts without necessarily requiring a payment.
A gift is a transfer of property from one person to another without expecting to receive something of at least equal value in return. The Internal Revenue Service (IRS) is concerned with these transfers to determine if a gift tax is owed. This concept applies to a wide range of assets. While cash is a common example, gifts can also include stocks, real estate, business interests, or personal property. The core principle is that if a transfer of value occurs without adequate consideration, it is deemed a gift.
Understanding the Annual Exclusion and Lifetime Exemption
The tax code provides two exemptions that allow individuals to give substantial amounts without incurring a tax liability. The first is the annual gift tax exclusion, which for 2025 is $19,000 per recipient. You can give up to $19,000 to any number of individuals during the year, and these gifts do not need to be reported to the IRS. For example, you could give $19,000 each to ten different people in one year without any tax implications.
When a gift to a single individual exceeds the annual exclusion amount, it does not automatically trigger a tax payment. The excess amount is instead applied against your lifetime gift and estate tax exemption. For 2025, this lifetime exemption is $14.19 million per individual. For instance, if you give $30,000 to your child, the first $19,000 is covered by the annual exclusion, and the remaining $11,000 reduces your lifetime exemption.
Married couples can combine their annual exclusions through gift splitting, allowing them to give up to $38,000 to a single recipient in 2025. To utilize gift splitting, the couple must file a gift tax return to signify that both spouses consent to treating the gift as being made one-half by each. This strategy effectively doubles the amount that can be given annually on a per-recipient basis.
Gifts Not Subject to the Gift Tax
Certain types of transfers are entirely exempt from the gift tax system, meaning they do not count against either the annual exclusion or the lifetime exemption. These exempt gifts include:
- Gifts made to a U.S. citizen spouse.
- Payments made for someone else’s educational or medical expenses, as long as they are paid directly to the educational institution or medical facility.
- Gifts to qualifying charitable organizations, which are instead treated as charitable deductions.
- Gifts made to political organizations for their use.
Required Information for Filing a Gift Tax Return
When you make a gift that exceeds the annual exclusion or decide to split gifts with your spouse, you must file IRS Form 709, the U.S. Gift Tax Return. You will need to gather detailed information, including:
- Your personal details such as your full name, address, and Social Security number.
- The recipient’s (donee’s) full name, address, and their relationship to you.
- A complete description of each gift, for example, “100 shares of XYZ Corporation common stock.”
- The date the gift was made.
- The fair market value (FMV) of the gift on the date of the transfer.
A component of the return is the fair market value (FMV). For publicly traded stocks, the FMV is the average of the high and low selling prices on the date of the gift. For real estate, you will need a professional appraisal to determine the value.
The Process of Filing Form 709
After you have completed Form 709, the next step is to file it. The deadline for filing is April 15 of the year following the year in which you made the gift. This deadline coincides with the regular income tax filing deadline, and an extension for your income tax return automatically applies to your gift tax return.
Form 709 is filed by mail. The instructions for Form 709 provide the correct address to use, and it is advisable to send the return via certified mail for a record of delivery. The IRS does not send a confirmation of receipt, so the filed return and your proof of mailing serve as your record. A tax payment is only required if your cumulative gifts have exceeded your entire lifetime exemption.