how to fill out schedule A for form 709 gifting

[M-MTax]

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@nofan wrote:

....I don’t feel so easy rolling the dice with not reporting it......

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@nofan 

In no way was I suggesting, nor would I every suggest, that you NOT report it nor fail to properly and completely prepare the 709 prior to filing. I'm sorry if you interpreted anything in post to the contrary.

Since the IRS retains these things seemingly forever, it's a good idea and prudent to seek advice and guidance from a local professional who is familiar with estates and trusts including the entire gift tax schema.

[KM-8]

Hello again M-MTax,

I thought I was set and had the form figured out, but I am now confused by one specific part.

As I read through the instructions for Form 709....

Under Part II—Tax Computation (Page 1 of Form 709)
and Pertaining to line 7
The instructions say...
The applicable credit (formerly unified credit) amount is the tentative tax on the applicable exclusion amount. For gifts made in 2024, the applicable exclusion amount equals:
• The basic exclusion amount of $13,610,000, PLUS
• Any DSUE amount, PLUS
• Any Restored Exclusion Amount.

It then says....

Determine the tentative tax on the applicable exclusion amount using the rates in the Table for Computing Gift Tax, and enter the result on line 7. 

My question/confusion is ... Do I put the basic exclusion amount of $13,610,000 on Line 7

OR

do I put (from the Table for Computing Gift Tax) the amount based on taking Column A ($1,000,000) and then add together the tax (on that Column A amount) of $345,800 (from Column C) PLUS the 40% (from Column D) on the additional 12,610,000 ...which would be $5,044,000???

I originally thought I should put the $13,610,000 amount, but now I'm wondering why they said to use the Table for Computing Gift Tax??

Any thoughts on this??

[M-MTax]

@KM-8 

It is indeed confusing, but you do not enter the $13.6 million figure on that line (which is the lifetime exclusion amount - currently).

Rather, you enter the credit as per the table.

[KM-8]

Thank you for that clarification!

Then as long as I'm understanding the table correctly, I should be good to go!

Have a great night!

[Lukester1980]

Nofan,  I am right there with you regarding the confusion. I got a letter from the IRS rejecting my Form 709 as not being complete. Like you, our gift was a simple cash gift to a child. We did not submit Parts 2,3, 4 and they were not applicable and blank. Took me forever (and a call to the IRS) to figure out they were referencing Schedule A of Form 709, and NOT Schedule A of my 1040. The fact that Turbo Tax does not support Form 709 electronically did not help at all either. You are not alone in this confusion. 

[M-MTax]

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@Lukester1980 wrote:

The fact that Turbo Tax does not support Form 709 electronically did not help at all either. 

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You can buy standalone software for this purpose, and it's actually priced reasonably.

See https://www.puritas-springs.com/product-category/federal

I'm not sure what is meant by "electronically" but a 709 cannot be electronically filed (e-filed), it must be printed out and mailed.

[Lukester1980]

M-MTAX, Thank you for your response! That software looks like the way to go for me. 

[nofan]

Lukester1980, I did figure it out and one of the things that I learned researching online is if you don’t send in all of the entire pages if I recall correctly, it was 10, IRS likely would kick it out. my issue wasn’t with the gifting in 2024 so much , it was the confusion about inputting a gift to another family member about eight years ago and figuring out where to put that in. interestingly, that was already reported to the IRS on the given tax year, but they wanted it stated again in addition to adding that amount to the total lifetime gifting in excess of the standard exclusion.  I’ve heard that the IRS is still on floppy disk computer systems, which if true would seem totally consistent with a typical government agency. After I figured it all out. I went back through the form and all the figures seem to jive and in a bureaucratic way I’m ashamed to say, I understood it>😵‍💫 one must think like a bureaucrat to interact with a bureaucratic agency., i.e. think counterintuitively. 🤵🏻‍♂️

[Lukester1980]

M-MTAX, got time for a question regarding filling out that Form 709? My wife and I did a split gift to our Son and DIL to help buy their 1st home. I am filling out Schedule A, Part 1, B, (h) For split gifts, enter 1/2 of column (g). At this entry, the Puritas software makes me do an override to input that number. Is this correct?  

[Lukester1980]

This Form 709 is a Royal PIA to fill out! Still can't get the total annual exclusions correct. If both my wife and I split a Gift to both our son and DIL, isn't that $18K from each of us to both of them for a total of $72K gift exclusion? Form keeps telling me only $36K total exclusion. No worries if you don't know the answer. I may have it wrong or I missed something on the form.

[nofan]

Lukester1980, I’m going to caution you that I can only give you my uneducated guess/opinion. But the way I understand the regulations is, yes you can gift 18,000 to your son and another 18,000 to your daughter-in-law and your wife can do the same for a net total of 72,000 for the 2024 tax year. Possibly your question could be better answered by the provider of the software, is it possible there is an override for that field where you can put in an excess of 36,000 ? is there a way to stay within that 36,000 by only reporting for your son, then in another column or field report that amount to your daughter-in-law for her 36,000 ? Might be worth emailing the provider of that 709 tax form software.

I will admit that it took me much longer to figure all of that out by hand than it did to do my entire taxes with TurboTax. I’m curious as to when did you file your original 709 with the IRS that they did not accept, just wondering how long it took between you mailing in it and then the IRS letting you know that they were not happy with your 709 submission. I submitted my 709 around April 9 or so and I’ve not heard back from them if they had a problem with how I did it. However I fully understand that could still happen any time within my lifetime🤬

[M-MTax]

@Lukester1980 

I just wanted to make you aware that you and your wife still need to file separate 709s (you should mail the returns in the same envelope if you make the election).

Gift splitting does not mean that only one spouse needs to file a return.

[M-MTax]

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@Lukester1980 wrote:

Form keeps telling me only $36K total exclusion.

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That's because it's $36k on your return and then $36k on your wife's return.

[Lukester1980]

I hand filled out the Form 709 and mailed it in the end of Jan 25. Got notified last month I needed to send in more info. The software M-MTAX recommend is very helpful. It looks like the answer is that both my spouse and I need to fill out the form 709. 

[Lukester1980]

I am discovering that you are 100% correct. We both will need to fill out and mail in the 709. Does that mean we each fill out a Schedule A as well?  Divede the total gift figure in half for each of us? Just curious. Thanks for your help and the software suggestion.