IRS deals with several kinds of taxes and penalties. These taxes range from personal taxes that deal with business and estate-related transactions. One of such taxes is the taxes on gifts. This is important since it helps validate and authenticate your gift. This tax falls under the 709. Here is all you need to know about the IRS tax form 709.
The IRS Tax Form 709
The IRS form 709 is used for reporting taxable gifts. It also allocates all the lifetime use of an individual taxpayers’ transfer tax exemption. An individual may be required to fill an IRS 709 form and pay a gift tax if they wish to make one or more transfers. This transfer could be of real estate or cash. This tax is not applicable to all individuals. For example, the person transferring the gift shall have to pay the taxes. This means that the recipient of the gift shall not be liable to pay any gift taxes. The donor must also pay the gift tax only if their gifts are not exempt.
Gift Tax
This gift tax is applicable to the transfer of property from one owner to another. This occurs when the recipient of the property does not pay up to the market value of the property. This is because that transfer is then seen as a ‘gift’. Hence, it holds the donor accountable for the transaction. It is due to this reason that the donor must pay the gift taxes. Along with this, lending a loan to a certain person with a zero percent interest rate is also viewed as a gift.
The person lending the money is once again supposed to be paying the gift taxes to validate the loan given. It is easy to find the form 709. It is available on the IRS website. You simply need to download the form, fill it, and send it by mail to their office. The office does not accept emails and requires this form to fill in hard copy.
The first section of the form focuses on identifying the donor and the nature of the gift. You will have to provide proof of identity. The reason behind the gift also needs to be answered. Part two of the form focuses on filling out any tax dues. If your gift does not exceed the amount of $15,000 as per the 2020 guidelines, then you are not required to file the tax. Also if the gift is to a spouse who is a US citizen, then you are exempt from any gift taxes. However, if you give the gift to a spouse who is not a US citizen, then the gift taxes do apply.
