Do you need to file a 2016 gift tax return by April 18?
Generally, you’ll need to file gift tax return if you made gifts that exceeded the $14,000-per-recipient gift tax annual exclusion (unless to your U.S. citizen spouse) and in certain other situations. If you transferred hard-to-value property, such as artwork or interests in a family business, consider filing a gift tax return even if not required.
Some transfers require a return even if you don’t owe tax. And sometimes it’s desirable to file a return even if it isn’t required.
When filing is required
You’ll need to file a gift tax return for 2016 if, during the tax year, you made gifts:
- That exceeded the $14,000-per-recipient gift tax annual exclusion (other than to your U.S. citizen spouse)
- That exceeded the $148,000 annual exclusion for gifts to a noncitizen spouse
- You wish to split with your spouse to take advantage of your combined $28,000 annual exclusions
- To a Section 529 college savings plan for your child, grandchild or other loved one and you wish to accelerate up to five years’ worth of annual exclusions ($70,000) into 2016
- Of future interests — such as remainder interests in a trust — regardless of the amount
- Of jointly held or community property
When filing isn’t required
No return is required if your gifts for the year consist solely of annual exclusion gifts, present interest gifts to a U.S. citizen spouse, qualifying educational or medical expenses paid directly to a school or health care provider, and political or charitable contributions.
If you transferred hard-to-value property, such as artwork or interests in a family-owned business, consider filing a gift tax return even if it’s not required. Adequate disclosure of the transfer in a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file.
Meeting the deadline
The gift tax return deadline is the same as the income tax filing deadline. For 2016 returns, it’s April 18, 2017 (or October 16 if you file for an extension). If you owe gift tax, the payment deadline is also April 18, regardless of whether you file for an extension.
The best advice we can offer is, “don’t go it alone.” Contact Tony Constantine, CPA, Ciuni & Panichi, Inc. Tax Partner, at 216-831-7171 or firstname.lastname@example.org for the advice you need for a positive tax filing experience.
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