Did you give your daughter $25,000 to help pay for college? Did you help your son purchase a home by making the $50,000 down payment? Did you pay your niece's rent of $18,000 for the year? If so, do you or your family members have to file a special tax return to report these gifts?
For you, the answer is yes and you will need to file a gift tax return. If you made gifts to any individual of more than $17,000 in 2023, you must report those gifts on a Form 709. The term "gifts" encompasses not only cash gifts, but also Christmas and birthday presents, and paying for things such as rent, clothing, or meals. The $17,000 annual exclusion limit is a per person rule. If you give one person $17,001, then you need to report the extra $1. However, if you give 10 people $17,000 or less, you do not need to report the gift. Your family members and friends do not need to file a gift tax return if they receive gifts, and they also do not need to reflect the gift on their income tax return.
If you have questions about whether you need to file a gift tax return, ask your accountant or call Rehberg Law Group at 206.246.8772. Gift tax returns are required to be filed with your income tax return the year following the gift, so make sure to contact your accountant or attorney early enough to file your gift tax return on time this year.