The Gift tax return can be referred to as a form that highlight federal or centralized legal for. The Internal Revenue Service has established a limited yearly or lifelong tax exempt regulation upon the gift that the individual receives. And whenever, that limitation exceeds, the recipient of the gift is required to fill the gift tax return form as they, as taxpayers file for taxes.
If we look at the present day gift tax exemption that is in the current 2018 year, then annually, the exemption is $15,000. Since 2013, the gift tax exemption limit was $14,000 and in the passage of five years the IRS decided to increase a further $1000 on the limit. So, that means that if an individual receives any gift that exceeds even a penny or dollar from the aforementioned limit, then they are obligated to fill the form as they file for taxes. It is because any amount that exceeds the limit has entered the domain of being taxed.
The complexity of the Gift tax return
So far we know that any gift that exceeds the limit proposed by the Internal Revenue Service is subject to taxation. In this respect, the regulations imposed by the IRS on the amount of money given to individuals as gifts from the family is far from simple. So, it is advisable that both the recipients and the giver of the gifts find a tax preparer or double check with your region tax regulations and lawmaking body beforehand.
Majority of the people in United States, in order to escape from or bypass the gift taxes make use of estate planning, organize a book-keeping that would help them to manage the calculations and avoid taxes to a maximum, seek consultation with the tax professional or advocate and work with an accountant. This will help them to tactfully decide how and when to use the estate owner’s money that is given to them as a gift.
Filing the gift tax return
So whenever an individual gives another a gift that holds substantial value, then that gift becomes subject to gift tax that is a form of centralized tax. Although the receiving party cannot pay the giver full amount in return in order to consider the amount he receives from the giver as gift, he or she has to pay a sum that is less than the actual value the gift holds.
Now, the giver of the gift has to fill the federal tax form or the gift return tax form if the amount he transfers to the recipient surpasses the limit imposed by the US taxation department bureau. So, it must be clear that the giver of the gift has to fill the form and file for federal gift tax unless and until special arrangements are made that allow them to defer the gift tax they are obligated to pay.
The role of the receiver
What is the form of the Gift tax return? In order to file for gift return tax, the individuals have to fill out the IRS 709 Form. However, not only the giver but also the receiver has to pay taxes. The recipient taxpayer, on the behalf of the presenter, may either pay the whole of gift tax or a significant portion from the whole tax whenever the giver surpasses the yearly gift tax exemption limit.
Gift tax return in gift splitting
Under the process of gift splitting, the centralized government of United States allows the spouses or married couples to jointly file for gift tax return form in order to double the amount of taxes on their respective gifts.
As each spouse contribute to pay half of the amount from their side, their individual allowances are combined. An important note or a moment of comprehension for married couple is that if they want their gift splitting process to be lawful and sanctioned, while filing for the taxes, they need to first agree jointly on the gift and they need to state the circumstances under which the gift was presented. Therefore pertaining to the limitation imposed by IRS in the present year, the married couple, when they file for gift tax return form need to ensure that if the amount of gift exceeds $30,000, then the exceeding amount is subject to taxes.
So, above were all the necessary information about gift tax return forms, who files them and who pays the gift return tax.