Whenever a person transfers money, property, or other assets to someone else without receiving something of equal value in return, it may be considered a gift for federal tax purposes—and it may need to be reported to the IRS. 

This includes outright transfers of cash or property, as well as allowing someone to use or benefit from property without expecting compensation. If the value of the gift to any one individual exceeds the annual exclusion amount—$18,000 per recipient in 2024—a Gift Tax Return (Form 709) is generally required. 

Reporting Requirements and Exclusions 

While reporting may be necessary, paying gift tax is often avoidable due to the generous lifetime gift and estate tax exemption, which is $13.61 million per person in 2024. This lifetime exclusion is in addition to the annual $18,000 per-recipient exclusion. 

Gift-Splitting for Married Couples 

Married couples can maximize tax-free gifting by electing to split gifts, effectively doubling the annual exclusion to $36,000 per recipient in 2024. 

However, this benefit is not automatic. To take advantage of gift-splitting: 

• Both spouses must consent to the election. 

• A Gift Tax Return (Form 709) must be filed for both spouses, even if only one spouse made the gift. 

• The election must be made on a timely filed return. 

Gift-splitting can be a powerful estate planning tool, but it must be carefully documented to ensure compliance and avoid IRS issues down the line. 

Gifts That Are Not Subject to Gift Tax 

Certain transfers are excluded from gift tax, including: 

• Gifts that do not exceed the annual exclusion amount 

• Tuition or medical expenses paid directly to an institution or provider 

• Gifts to a spouse 

• Gifts to a qualified charity 

• Gifts to a political organization for its use 

Gifts That May Be Taxable or Reportable 

These types of transfers may trigger reporting requirements: 

• Cash and tangible personal property (e.g., cars, jewelry, art) 

• Cancellation of debt 

• Payments made on someone’s behalf 

• Real estate transfers 

• Transfers of intangible property (e.g., stocks, bonds, partnership interests, patents, royalties) 

• Contributions to 529 college savings plans 

• Transfers to trusts 

Valuation and Documentation 

The fair market value (FMV) of each gift must be reported on the Gift Tax Return. For some gifts, like cash, the FMV will be equal to the face value. For non-marketable assets—like real estate, closely held businesses, or collectibles—documentation is essential. This may include: 

• Formal appraisals 

• Business valuations 

• Supporting financial statements 

Accurate reporting protects you. Once a gift is disclosed, the IRS has three years to review it. If a gift is not reported, there’s no statute of limitations—the IRS can assess tax or penalties at any time. Prior-year gifts can still be reported by filing or amending a past Gift Tax Return. 

Filing Deadline 

The deadline to file a Gift Tax Return for the 2024 tax year is April 15, 2025, aligning with the personal income tax filing deadline. If you file for an extension on your personal return, the extension applies to your Gift Tax Return as well. 

Plan and Report Wisely 

Whether you’re making annual gifts to family members, contributing to a trust, or transferring business interests, proper gift reporting is key to preserving generational wealth and avoiding unnecessary IRS scrutiny. 

Have questions about gift tax reporting or planning strategies?
Contact our office today to ensure your gifting strategy is tax-efficient, fully compliant, and aligned with your long-term financial goals.