Form 709 and how to create it in Drake Tax

Overview

Form 709 is the United States Gift (and Generation-Skipping Transfer) Tax Return. A taxpayer may be required to file Form 709 if they gave gifts during the tax year to another person where the total is greater than the annual exclusion amount.​

• If the taxpayer/spouse gave gifts to someone totaling more than the annual exclusion amount (other than to their spouse) they likely have a filing requirement.

• The donor is responsible for paying the gift tax and filing Form 709. If the donor does not pay the tax, the person receiving the gift (donee) may have to pay the tax.

• If the only gifts you made during the year are deductible as gifts to charities, you do not need to file a return as long as you transferred your entire interest in the property to qualifying charities. If you transferred only a partial interest, or transferred part of your interest to someone other than a charity, you must still file a return and report all of your gifts to charities.

• Certain gifts, called future interests, do not qualify for the annual exclusion and require you to file Form 709 even if the gift was under the exclusion amount.

Deadline

All gift and GST taxes must be computed and filed on a calendar year basis. Generally, you must file the Form 709 no earlier than January 1, but not later than April 15, of the year after the gift was made. If April 15 falls on a Saturday, Sunday, or legal holiday, Form 709 is due on the next business day.

Requesting an Extension

There are two ways to request an extension for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return:

1. Any extension of time granted for filing your individual federal income tax return will also automatically extend the time to file your federal gift tax return.

   • Use Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax return, or Form 2350, Application for Extension of Time to File U.S. Income Tax Return.

   • Use these forms to extend filing time for a gift tax return only if you are also requesting an extension of time to file your individual income tax return.

2. If you do not request an extension of time to file your individual income tax return, file Form 8892, Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax, to request an automatic 6-month extension of the time to file.

   • The 8892 also serves as a payment voucher for a balance due on federal gift taxes for which you are extending the time to file.

Generating Form 709

List all reportable gifts made during the calendar year on a single Form 709 per taxpayer. Each spouse must file their own Form 709 - there is no Married Filing Jointly (MFJ) 709. To create a 709 return,

1. Open/Create a 1040 return for the client.

2. Enter demographic information on screen 1.

3. Select the Taxes tab and choose 709 Gift Tax Return.

4. Complete the first 709 for the taxpayer.

5. Then, press the Page Down key on your keyboard to create a second 709 for the spouse, if applicable.

6. If Form 709 requires an attachment (for example, if an election option requires the amounts in question to be identified), use the ATT screen on the 709 menu.

7. Screen A (the Gifts screen) provides check boxes for electing certain optional ways of treating some income and exclusion amounts.

Filing Method

You cannot e-file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. The Instructions for Form 709 direct you to mail it to the applicable address listed below.

File Form 709 at the following address:

Department of the Treasury

Internal Revenue Service Center

Kansas City, MO 64999

If submitting Form 709 by a PDS, mail to:

Internal Revenue Service

333 W. Pershing Road

Kansas City, MO 64108

Additional Resources

• Form 709 instructions

• Tax Cuts and Jobs Act

• IRS: About Form 709

• Publication 525