I want to gift up to 40,000 this year to one person. Will I owe money because it's above 14000, which is the annual limit? I know there's a lifetime exclusion limit of roughly 5 million. If I don't cross that limit, will I still owe, will I not owe anything as long as that isn't crossed? I don't want to gift more than the 14k if I will have to pay taxes on it.
The gift limit for 2014 is $14,000 to each individual without having to file a gift tax return, Form 709. If you have not exceeded the limit of $5.34 million in total gifts given there will be no gift taxes owed.
So that 5.34 million limit isn't just to many recipients... say I send 40k this year to one person, to confirm this, I will owe no taxes on it. I have not have exceeded the 5.34 limit.
The 5.34 million is the aggregate of all gifts given by you to all recipients to date. So if you have not reached that limit in 2014, you will owe no gift taxes, but will have to file a gift tax return if you gift the 40K to a single individual.
Is that form to be submitted with the turbotax return filing, or separately ?
If your gift to any one person exceeds $14,000, you are required to file a Form 709 gift tax return with the IRS, whether taxes are due or not.
Gift Tax has nothing to do with Income Tax.
The Gift Tax is integrated with Federal Estate Tax.
If you personally own under $5.43 million in total assets, you are this year, and presumably in the future, not liable for Estate Tax. However, the system is set up such that large Gifts made reduce that $5 million figure.
So, each year you, and if married your spouse also, are allowed to give any one individual $14,000 from each of you, thus a married couple can give, for example to a child, $28,000. If the child is married, that doubles up by giving to the child's spouse, for a total of $56,000 [in 2015].
If an individual gives more than the $14,000 to a single individual, the donor is obligated to file a Form 709 Gift Return so that the IRS can keep track with the Estate Tax in mind. Ultimately, even if you give away $1 million in a year to one person, if you yourself have under the $5.43 million, then at your death there would be no Estate Tax liability, assuming that you did not have further increase in your assets. However, nevertheless you would still be obligated in the year of alarge [>$14,000] gift to file Form 709
http://www.irs.gov/pub/irs-pdf/i709.pdf InstructionsIs there software available for help filling out Form 709?
It appears it is not supported in Turbo Tax.
Thanks
From @ChelsiE2 :
Unfortunately, you won't be able to file a Gift Tax Return with TurboTax. A Gift Tax return should be filed separately from your personal income tax return as it has no effect on taxation at the individual level.
The IRS provides Form 709 and Instructions here:
Form: Form 709
Instructions: Form 709 Instructions
Does anyone know if there is other software besides Intuit that can help with Form 709?
There are a number of sources advertising Form 709 software on the internet (search term was "form 709 software"); unfortunately, we cannot make a recommendation in this forum.
Here are links to Form 709 and Form 709 instructions.