I know TurboTax does not support Form 709 but hoping someone will know the answer.
The provider of the software I use for Form 709 has made a change to the 2020 version of Form 709 that does not seem correct. I spoke to them and was told that I may be correct but CPA's told him they don't follow the rule.
Feedback please...
On Page 3, Part 4, Line 1.
- Line 1 on the 2020 version now includes the gifts by the donor, as well as the spouse.
- On the 2019 version it only includes the gifts by the donor. The spouse's gifts are not included.
- Line 1 states "value of gifts of DONOR", "Add totals from column H of Parts 1,2,3"
The instructions for Part 4 (Page 11) - Taxable Gift Reconciliation seem to be quite clear:
Line 1 (Instructions for 2020, page 11)
Are you still confused about this topic or the instructions? Which software are you using?
Thanks for responding...
The issue is:
To me, the instructions for split gifts on Form 709, Page 3, Part 4, Line 1 are quite clear yet the software provider has added the spouses split gifts beginning with the 2020 return.
The questions are:
1. Am I missing something obvious?
2. What is the argument that the spouses gifting should be included?
I'd rather not identify the provider since I may be mistaken.
Noting my earlier question:
The instructions for Form 709, Page 3, Part 4, Line 1 seem quite clear that only the DONORS gifts are to be reported on Line 1 yet the software provider has added the spouses split gifts to Line 1 beginning with the 2020 return.
Can anyone provide documentation that the spouses gifting is required to be included on Form 709, Page 3, Part 4, Line 1?
The reason TurboTax has you split the gift with your spouse is because otherwise, Each spouse must file a separate return if he or she makes any taxable gifts. You can, however, choose to “split” gifts with your spouse. Making a split gift allows you to take advantage of your annual gift tax exclusion plus your spouse's exclusion for a gift that is made entirely by you.
Here is a TurboTax article about gift splitting.
The instructions for form 709 state as follows with regards to spouses and gifts: (See line #8, as it corresponds to Form 709, Page 3, Part 4, Line 1.)
Determine whether you are required to file Form 709.
Determine what gifts you must report.
Decide whether you and your spouse, if any, will elect to split gifts for the year.
Complete lines 1 through 19 of Part 1—General Information.
List each gift on Part 1, 2, or 3 of Schedule A, as appropriate.
Complete Schedules B, C, and D, as applicable.
If the gift was listed on Part 2 or 3 of Schedule A, complete the necessary portions of Schedule D.
Complete Schedule A, Part 4.
Complete Part 2—Tax Computation.
Sign and date the return.
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Thankyou for your reply. Perhaps I missed it, but I don't see an answer addressing my question.
Specifically:
Page 11 of the instructions for 2020 Form 709, Page 3, Part 4, Line 1 seem quite clear:
Enter only gifts of the donor. If gift splitting has been elected, enter only the value of the gift that is attributable to the spouse that is filing the return.
Of the examples I can find with split gifts, many are adding the spouse's gift to the donor's gift on Line 1. Why?
Can anyone provide documentation that the spouses gifting is required to be included on Form 709, Page 3, Part 4, Line 1?
That line says to add lines 1 and 2 and 3 in column H so there's your answer. If not, then why does the form have you split the gift in half for both spouses on the schedule above that part?
Thanks but the instructions for split gifts are:
Page 11 of the 2020 instructions for Form 709, Page 3, Part 4, Line 1 are quite clear:
Enter only gifts of the donor. If gift splitting has been elected, enter only the value of the gift that is attributable to the spouse that is filing the return.
Also, Line 1 on Part 4 states "Total value of gifts of DONOR"
Wouldn't be the first time the instructions conflicted with the form. Look at the form itself.
It seems the instructions are provided to give direction.
Line 1 states "Total value of gifts of DONOR". Nothing more.
Why don't you call the IRS? Either that or use a tax pro. The instructions have been wrong before and the IRS had to correct them.
I was hoping to find an expert that could find documentation that would override the instructions. It seems such a basic question yet no one has been able to.
I've seen examples by the pros that do it both ways.
I've seen examples by the pros that do it both ways.
Yep, and you won't find an expert that has ANY documentation that would override the instructions.....there is no law or regulation.....the forms and instructions are designed and produced by the IRS and there's no code section or regulation that controls that.
Thanks - If it were you, would agree that the instructions state to only include the donors gifts on line 1 for Split Gifts or would you add them anyway even though adding the spouse's gifts will increase your Taxable gifts on Line 11.
Read the instructions for line 2 and you'll discover that the math is wrong no matter what you do. I'd add them and include a statement with the returns.
@Romper The other thing you might want to note is gift splitting is not beneficial sometimes depending......you're using the other spouse's DSUE and that may not be best when things like age and health and other stuff is considered.
Please explain how the math is wrong? Not doing DSUE, pretty simple gifting to kids and grand kids.
The instructions are hosed. Here's how I'd do for a hypo gift of $30k by one spouse to a kid. Result = entire annual exclusion used and the same is repeated for the other spouse....mailing both returns in the same envelope.
Gift of $30k:
FMV of gift by H = $30k x 1/2 = $15k
FMV of gift by W = $30k x 1/2 = $15k
Part 4 Line 1 = $15k
Part 4 Line 2 = $15k
Part Line 3 = $0
BTW read up on the lifetime exclusion because you can hose yourself if you don't know what you're doing. Talk to an estate planner.
I agree with your example for $30,000. That is the way it should work.
I redid my return using your suggestion (reporting only the individual spouse's gifts on each return) and it eliminates the spouse’s gifts on Line 1 as expected.
Unfortunately using my Form 709 software for 2020 with the spouse's split gifts in each return the results come right back to the original subject. The spouse's gifts are added to Line 1.
If the 2020 software did not add the spouse's gifts to line 1 the totals for Line 3 are identical for individual gifting and spouse gifting. I.e. the sum of both returns.
Therefore the problem remains - why are software providers for Form 709 including the spouse's gifting on Line 1 rather than following the instructions?
Thanks for your help.
PS - I am familiar with the lifetime exemption. The concern is it is going to be lowered.
First - I would like to thank you for highlighting this issue, even when other respondents have missed the point of the question.
This issue still exists so I'm going to layout how I came to the same question directly from Form 709.
working through the 2022 Form 709 -- Part 4, line 1 reads (CAPS added):
Total value of gifts of donor. Add TOTALS FROM COLUMN H of parts 1, 2, and 3.
"TOTALS FROM COLUMN H" is the source of the issue, because Column H includes BOTH the gifts of the donor AND THE DONOR'S SPOUSE.
To rephrase: Even though donors are "splitting", Schedule A Part 1 specifically has you add "Gifts made by the spouse". So even though you are splitting, adding up Column H will give you the total gifts of BOTH spouses.
I would infer that software providers are also making this mistake?
The problem is then that on part 4 line 2 it asks for "total annual exclusions" for gifts listed on line 1. So I would assume "total" means both spouses (in 2023 - $17,000*2=$34,000.
What's the purpose of having each spouse file 709 if the form is working on a TOTAL for both spouses? Seems like the IRS would end up double counting the gifts.
Or on an individual form -- do you double the annual exclusion as well as doubling the lifetime exclusion?
I am not concerned with going over $12.92mm * 2, but I am concerned with getting the correct numbers in.
Has anyone else resolved this -- and does the IRS form 709 part 4, line 1 perhaps incorrectly ask for the totals of Column H, rather than just 1 spouse's amount from Column H?
Did you ever get a full answer to your question? This problem still seems to exist with Form 709 in the 2022 and 2023 versions.
Thanks for your reply James416.
I've resorted to accepting the addition of the spouses gifts for two reasons:
One reason for each spouse filing a Form 709 is because of the required prior gifting history. It's very likely that each spouse has gifted differently.
Reference to your question on Total Annual Exclusion. It's not necessarily going to be 2x the annual exclusion. You may want to watch the video from MMtaxMM