Question: Heather and Charlie, a married couple who are both U.S. citizens residing in a non-community property state, want to gift their daughter $100,000 in 2022 toward the purchase of a condo on Maui. Can they file a joint gift tax return so they can claim their combined total $32,000 annual exclusion?
Answer: No. Heather and Charlie must each file a separate Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, to claim their own $16,000 exclusion ($32,000 combined total). If the gift was made by either Heather or Charlie alone, under §2513, they may still elect to treat a gift made by one spouse as two equal gifts totaling the amount of the single gift with half being given by each spouse. This gift-splitting makes the annual exclusion available to each spouse to offset the total gift. Each spouse consents to the gift-splitting by checking the box on Form 709, Line 12, providing details on Lines 13 through 17 and having the consenting spouse sign the consent on Line 18 of the other spouse’s return. Instructions for Form 709 state that the couple should file both gift tax returns together in the same envelope to avoid IRS correspondence.
Each spouse reports the entire value of each gift made during the year on Form 709, Schedule A (Part 1, 2 or 3), separately listing gifts made by each spouse. Half the gift to be split is entered on Part 1, 2 or 3, Column G, to represent the consenting spouse’s share of the total gifts made by both spouses. The donor’s share of the total gifts, the sum of the values in Column H, is entered on Part 4 (Taxable Gift Reconciliation), Line 1.
Check out NATP’s recent webinar Preparing Form 709 for Gifts now available on-demand.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.