23 year old student child 709

[jacknelson218]

Hi there, My son is 23 year old student and doing his masters in Europe. He is not working and hence has no income. Other than paying tuition directly to his college, I transferred some money to his account (around $100k) for his expenses and to build his career.. Should I be filing 709 as it is not directly for tuition? I am claiming him as my dependent on my taxes. Thanks in advance for your advice!

[SusanY1]

Yes, you should be filing a gift tax return (Form 709) for the transfer of funds to your son since the amount was in excess of the annual exclusion amount.  

[jacknelson218]

Thank you so much!

I have a follow up question:  The amount I am gifting is much less than the life time exemption of 11 Million which I don't think I will earn in this life, so I won't owe gift tax. So just curious about the consequences of not submitting 709.  For e.g. If my son uses some part of the remaining amount later for downpayment of house, will he be asked where he got it from and would IRS penalize us for not submitting 709? I am just wondering as I don't owe gift tax and am supporting a dependent son, not that I want to break rules. 709 seems a bit complicated but I am trying my best to follow it and fill it if it is really necessary and has consequences. Thanks again for clarifying my lingering questions.

[KatrinaB48]

According to Section 6651 of the IRS code, penalties for both late filing and late payment will be assessed if you are later required to file. There could also penalties for willful failure to file a return on time or willful attempt to evade or defeat payment of tax. Please view the Penalties section in this IRS link for more information about filing form 709.