Can a late gift tax return for previous years be filed, without penalty, when no gift tax is owed?

[MaryM428]

TurboTax does not support Form 709.

Where do I report a cash gift?

[tagteam]

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@delooox wrote:

Do you know if I need to attach a copy of the trust document when I file the 709?

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You can either describe the trust in an attached statement (include the trust's EIN) or attach a copy of the trust document.

[delooox]

Thank you!!!

[DLMCPA]

Did you have to pay the penalty? 

[ColeenD3]

Per Tagteam above:

There is no penalty for late filing a gift tax return (Form 709) if no tax is due. 

The reference to a "minimum penalty" for failure to file applies to income tax returns (Section 61), not gift tax returns, which are addressed in Section 2501.

@DLMCPA

[delooox]

I have not filed it yet. Looks like one of the experts says no penalty for not filing if no tax is due. 

[delooox]

Thanks. But I am wondering too, if it turns out after I die that my estate owes the gift tax then, would my heirs be liable for huge penalties by then?

[tagteam]

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@delooox wrote:

Thanks. But I am wondering too, if it turns out after I die that my estate owes the gift tax then, would my heirs be liable for huge penalties by then?

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Your estate would not owe gift tax (although it might owe estate tax depending upon the threshold at that time).

Reportable gifts simply reduce your unified credit.

[delooox]

So... if your whole life you did not report a gift because there was no tax owed during your lifetime, but then if there was a death (estate) tax due when you die over the unified credit, there would still be no penalties for not having reported the gift years ago?

[tagteam]

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@delooox wrote:

So... if your whole life you did not report a gift because there was no tax owed during your lifetime, but then if there was a death (estate) tax due when you die over the unified credit, there would still be no penalties for not having reported the gift years ago?

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You are going to have a problem if your estate reports that incorrectly but, otherwise, there would be no penalty for not filing gift tax returns at a time when no tax was due. 

[delooox]

OK that makes sense. Because you can't know ahead of time what laws will be in place regarding estate tax credits when you die. So any gift tax penalties would run concurrently with your filing (or not) at the time taxes might have been due.   Thanks for the clarification, Champ!

[nbguysf]

I received 160k as a gift from my mother last year in august; the funds were sent directly to the escrow account (it didn't go to my bank account). My mother is a US resident who doesn't work/live here or pay taxes in the United States; she lives in Peru. We need to file form 709, but I think we are late (it was due April 15th according to the IRS site). We thought it was due this monday May 17th. Does my mother have to pay taxes on the gift (cash funds) she sent directly to the escrow account last year? There is a lifetime GST exemption, and I believe we qualify for that. IIf you could please help me understand this information before filing and whether it is fine to file this Monday May 17th or after. THANK you so much!

[DLMCPA]

I don’t have time to finish....

That is a different issue.  I think there is form foreigner gifts like a 3520. I think the foreign national does  not have a unified credit.  If your mom is in Peru.  Then you have other issues. as I mentioned and you need a professional.  I remember ran old boss the a similar issue and he was glad he did not have any involvement with the will and estate planning.

[DaveF1006]

The IRS did not extend the filing date for Gift Tax returns.  Read this IRS link to determine if a gift return needs to be filed. Here is the summary of the link. Read this carefully.

• If you gave gifts to someone in 2020 totaling more than $15,000 (other than to your spouse), you probably must file Form 709. But see Transfers Not Subject to the Gift Tax and Gifts to Your Spouse, later, for more information on specific gifts that are not taxable.

• Certain gifts, called future interests, are not subject to the $15,000 annual exclusion and you must file Form 709 even if the gift was under $15,000. See Annual Exclusion, later.

• Spouses may not file a joint gift tax return. Each individual is responsible for his or her own Form 709.

• You must file a gift tax return to split gifts with your spouse (regardless of their amount) as described in Part 1—General Information, later.

• If a gift is of community property, it is considered made one-half by each spouse. For example, a gift of $100,000 of community property is considered a gift of $50,000 made by each spouse, and each spouse must file a gift tax return.

• Likewise, each spouse must file a gift tax return if they have made a gift of property held by them as joint tenants or tenants by the entirety.

• Only individuals are required to file gift tax returns. If a trust, estate, partnership, or corporation makes a gift, the individual beneficiaries, partners, or stockholders are considered donors and may be liable for the gift and GST taxes.

• The donor is responsible for paying the gift tax. However, if the donor does not pay the tax, the person receiving the gift may have to pay the tax.

• If a donor dies before filing a return, the donor's executor must file the return

[Antpaulm]

So you guys are actually saying you can gift 800,000 k without getting penalized from the IRS? I thought Form 709 always had to be sent in? Won't they come after you if there is a willingness to not file or if you get audited?