Gift Tax for year 2021

[zenmit]

I've read through other gift tax questions and answers in this forum and I'm pretty sure my question was answered, but just to confirm...

If a parent gives me $60,000 as a gift for just this year, that parent reports it to the IRS using form 709 when filing taxes for year 2021 (or they report $45,000 because the first $15,000 doesn't need to be reported), but neither I nor my parent will have to ever pay taxes on this gift amount because it's under the lifetime limit of $11 million.  The IRS only uses the form 709 to track how much money was given to me by this parent over their lifetime.  

Please confirm this, thank you!

Also, if anyone has a link to where the IRS states this on their website, that would be great as well. 

[tagteam]

The annual exclusion (currently $15,000) is reconciled in Part 4 of Form 709.

See https://www.irs.gov/instructions/i709#idm140535814570592

You might want to read through the general information for the form on the IRS web site.

See https://www.irs.gov/instructions/i709

[Opus 17]

Generally, yes. Since the gift is more than $15,000, the entire gift needs to be reported, not just the amount over $15,000.  The deadline for form 709 is April 15 but it is filed separately, not part of the 1040 tax return, and could be filed earlier if desired.  Turbotax does not prepare form 709 for you.

Also, each person may give another person $15,000 per year without reporting.  If both your parents are alive, one parent could give you $15,000 and the other parent could give you $45,000, so only one of those gifts is reportable and the other is ignored.  If you are married, each parent could give you and your spouse $15,000 each, and that way each of the 4 gifts would be below the reporting limit. 

[Mike9241]

wrong. the whole $60K needs to be reported. then the $15K exclusion comes in reducting the gift to $45K which then reduces the lifetime exemption

[zenmit]

Thanks for your answers so far, but can someone answer this part of my question:

"neither I nor my parent will have to ever pay taxes on this gift amount because it's under the lifetime limit of $11 million."  Is this correct?  As long as a parent never gives me more than 11 million, they won't have to pay taxes on the money they give me?   

Neither of my parents have anywhere close to 11 million anyway.  

[tagteam]

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@zenmit wrote:

"neither I nor my parent will have to ever pay taxes on this gift amount because it's under the lifetime limit of $11 million."  Is this correct?

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Yes, your statement is correct under current law.

[Pinky2090]

You're definitely on the right track but this area is tricky so you need to make sure you meet all the criteria for exclusion. This link may prove helpful:

www.irs.gov/newsroom/estate-and-gift-tax-faqs

Q. How did the tax reform law change gift and estate taxes?

A. The tax reform law doubled the BEA for tax-years 2018 through 2025. Because the BEA is adjusted annually for inflation, the 2018 BEA is $11.18 million, the  2019 BEA is $11.4 million and for 2020, the BEA is $11.58 million. Under the tax reform law, the increase is only temporary. Thus, in 2026, the BEA is due to revert to its pre-2018 level of $5 million, as adjusted for inflation.

Hope this helps!!

[tagteam]

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@Pinky2090 wrote:

....Thus, in 2026, the BEA is due to revert to its pre-2018 level of $5 million, as adjusted for inflation.

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Of course the statement quoted is accurate but anything could happen between now and 2026, lest we forget that only thirteen years ago the estate tax applicable exclusion was $2 million.