The 709 form instructions say that both spouses have to file gift tax return for half the gifted amount each, in community property state.
But what is the consequence if only 1 spouse submitted the 709 gift tax return for the full amount she gifted to their common son from her earnings? (Just FYI that they keep their accounts separate, file taxes as married filing separately, and the son is claimed as dependent only on the tax return of the gifting spouse. Also the amount gifted and their total estate is less than the lifetime exemption of $11 million.)
a) Will there be any penalties just becuase the other spouse did not submit 709 for half the gifted amount? (though there is no gift tax owed)? If so, who will be penalized - the son (receiver) or the parent/s? How much can the penalties be?
b) Or will there be no penalties and only 1 person's lifetime exemption will be considered?
