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cwtaxdummy
Level 1

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

The gift is a vehicle and it would not be going to anyone in my immediate family so it doesn't qualify for an immediate family exclusion according to the IRS. IRS says Form 709 is required for gifts over $15k, so does that mean come tax season I will be responsible for the valued taxes on that gift? I've seen that even though the form is required by IRS, they don't collect the taxes until you hit the lifetime limit of $11.7 million. Is that accurate?

1 Best answer

Accepted Solutions
xmasbaby0
Level 15

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

@cwtaxdummy 

 

" Why does the IRS say that if I give one single person a one time gift of $26,000 today, I'm responsible for filling out and submitting Form 709 AND I'm responsible for paying gift taxes on it. "

 

 The IRS does not say you will pay gift tax on the $26,000.    The tax law says you have to report the gift if it is over $15,000, so that the IRS can track your gifts in case you someday go past the lifetime limit and need to pay.

 

 

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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7 Replies
TomD8
Level 15

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

 The current lifetime gift tax exemption is actually $11.7 million. This means that you can give up to $11.7 million in gifts over the course of your lifetime without ever having to pay gift tax.  But gifts over $15K must be reported to the IRS on Form 709.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
cwtaxdummy
Level 1

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

@TomD8 That's where I get confused. IE - Why does the IRS say that if I give one single person a one time gift of $26,000 today, I'm responsible for filling out and submitting Form 709 AND I'm responsible for paying gift taxes on it. But then they turn around and say well actually, the lifetime limit is $11.7 million. Why not just say, if you give a one time gift over $15,000 you need to report it to the IRS but you won't be responsible for any taxes on that gift unless you give away more than $11.7 million in your lifetime? Am I interpreting that incorrectly?

Opus 17
Level 15

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

@cwtaxdummy 

How would the IRS know if you exceed your lifetime limit if they did not require reporting?  They are tracking your gifts against that lifetime limit.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
tagteam
Level 15

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?


@cwtaxdummy wrote:

Why does the IRS say that if I give one single person a one time gift of $26,000 today, I'm responsible for filling out and submitting Form 709.....


The extra $11,000 in your hypothetical ($26,000 less $15,000 annual exclusion) counts against your lifetime exemption, which will appear on your Form 709.

xmasbaby0
Level 15

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

@cwtaxdummy 

 

" Why does the IRS say that if I give one single person a one time gift of $26,000 today, I'm responsible for filling out and submitting Form 709 AND I'm responsible for paying gift taxes on it. "

 

 The IRS does not say you will pay gift tax on the $26,000.    The tax law says you have to report the gift if it is over $15,000, so that the IRS can track your gifts in case you someday go past the lifetime limit and need to pay.

 

 

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

View solution in original post

Mike9241
Level 15

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

the $26K gift would require a gift tax return but you would likely owe no tax. the excess $11K would reduce your lifetime exemption. i say likely because you probably haven't exhausted your $15.7 lifetime exemption.  beware there is no annual exclusion for certain types of gifts.   Why $15K? write to Congress to ask. they are the ones that enact the tax laws, not the IRS. 

Hal_Al
Level 15

Why do one-time gifts over $15k need to be reported to the IRS if the lifetime limit is $11.7 mil? Will I get taxed this year if I give one gift over $15k?

Q.  Why does the IRS say that if I give  a one time gift of over $15,000, I'm responsible for filling out and submitting Form 709, when there is no tax?

 

"Gift Tax" is somewhat of a misnomer.  Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/....

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