Wednesday, January 13, 2010

Do I need to file gift tax returns?

Gifting property to children can be a great way to reduce your estate tax burden, but when you make gifts that exceed a certain threshold amount, you will want to file a gift tax return.

It is important that you file gift tax returns (IRS Form 709) each year to report gifts you make which exceed the annual exclusion from the gift tax (currently $13,000 per donor per donee each year). Gift tax returns may also need to be filed for generation skipping transfer ("GST") tax purposes if you have a GST trust where distributions are made during the term of such trust or upon the termination of such trust to any of your grandchildren or great-grandchildren (or to other persons who are "skip persons" for GST purposes). Imposition of the GST tax can be avoided if you allocate (or are deemed to have allocated) a portion of each of your $3,500,000 GST exemptions as you make gifts in trust each year.

If you gift tax returns, they will be due at the same time as your Federal income tax return, normally April 15th of the year following the gift, unless extended.

If you need a Texas estate planning lawyer, contact Peterson Law Group.

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