When should you file a gift tax return?


If you made significant gifts to your children or grandkids last year, it’s important to know whether you’re required to file a 2018 gift tax return or whether filing one would be beneficial.

When you should file a gift tax return?

Usually, you must file one for 2018 if, during the tax year, you made gifts:

  • That exceeded the $15,000-per-recipient gift tax annual exclusion other than to your U.S. citizen spouse,
  • That you wish to split with your spouse to take advantage of your combined $30,000 annual exclusion,
  • That exceeded the $152,000 annual exclusion for gifts to a noncitizen spouse,
  • To a Section 529, college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($75,000) into 2018,
  • Of future interests — such as remainder interests in a trust — regardless of the amount, or
  • Of jointly held or community property.

You’ll only owe tax to the extent an exclusion doesn’t apply, and you’ve used up your lifetime gift and estate tax exemption ($11.18 million for 2018). Some transfers will still require a return even if you don’t owe tax.

What qualifies as tax-free gifts?

No gift tax return is required if your gifts are tax-free because they qualify as:

  • Annual exclusion gifts,
  • Present interest gifts to a U.S. citizen spouse,
  • Educational or medical expenses paid directly to a school or health care provider, or
  • Political or charitable contributions.

If you transferred property that is hard to value, such as art or interests in a family-owned business, look into filing a gift tax return even if you’re not required to. Adequate disclosure of the transfer in a return prompts the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file.

The April 15th deadline

The gift tax return deadline is the same as the 2018 income tax return filing deadline, April 15, 2019 — or October 15, 2019, if you file for an extension. However, if you owe tax, the payment deadline is also April 15, whether or not you file for an extension. If you’re not sure whether you must (or should) file a 2018 gift tax return, contact us.

CAPATA is a full-service accounting firm located in Laguna Niguel in southern California.