2020 form 709

[Souschef]

The IRS had just released the 2020 form 709 for gifts. The instructions are still in draft form. The gift I made was well below the limit, and there was a part of me that would think, "how will they find out?".
I would rather file the form than worry

[RunningBum]

Well below the $15,000 limit? Why would you bother?

[audreyh1]

Yeah, below $15,000 no reporting needed.

[Souschef]

Quote:

Originally Posted by RunningBum Well below the $15,000 limit? Why would you bother?

it was well over $100,000, but well below the 11 Mil limit.
Sorry I was not clearer on which limit.

[audreyh1]

Quote:

Originally Posted by Souschef The IRS had just released the 2020 form 709 for gifts. The instructions are still in draft form. The gift I made was well below the limit, and there was a part of me that would think, "how will they find out?". I would rather file the form than worry

Quote:

Originally Posted by Souschef it was well over $100,000, but well below the 11 Mil limit. Sorry I was not clearer on which limit.

OK, I see what you mean now. We are also filing 2020 forms 709 - one for each of us as we are treating the gifts as coming from both. That $11M+ estate exemption applies to individuals.

No, there is no easy way for them to find out. Yet it hadn’t occurred to us not to file. I expect some don’t, just like other obscure tax declarations.

[The Cosmic Avenger]

Quote:

Originally Posted by audreyh1 OK, I see what you mean now. We are also filing 2020 forms 709 - one for each of us as we are treating the gifts as coming from both. That $11M+ estate exemption applies to individuals. No, there is no easy way for them to find out. Yet it hadn’t occurred to us not to file. I expect some don’t, just like other obscure tax declarations.

Remember, any transfer over $10K has to be reported by the bank to the IRS as potential money laundering, and even lower but frequent transfers can be flagged, so you can't just do $9K every day (or, probably, every month, even) to get around the reporting requirements. So while I don't think the IRS is necessarily looking for it, I would expect that if they did at some point, they could easily find most gift transfers/checks. Although now I guess the important question is, how long do they keep that information?

[Car-Guy]

Same boat here (>15k) but I'm filing... Would they find out if I didn't? Probably not. Would it really make a difference in the long term? Probably not since I'm never going to hit the upper lifetime limits... But I try to follow the rules when I can, at least I have so far!


I need to look at the new form/instructions since the old one sure looked intimidating to me... Looks like it was designed for rich people and their accountants and not us lowly DIY millionaires.

[cathy63]

Quote:

Originally Posted by audreyh1 OK, I see what you mean now. We are also filing 2020 forms 709 - one for each of us as we are treating the gifts as coming from both. That $11M+ estate exemption applies to individuals. No, there is no easy way for them to find out. Yet it hadn’t occurred to us not to file. I expect some don’t, just like other obscure tax declarations.

If one half of the gifts comes from each of you, then you can file a joint form 709 instead of filing two forms. You just check the box to indicate the 50/50 split, enter both spouse's SSNs and both sign.

[audreyh1]

Quote:

Originally Posted by The Cosmic Avenger Remember, any transfer over $10K has to be reported by the bank to the IRS as potential money laundering, and even lower but frequent transfers can be flagged, so you can't just do $9K every day (or, probably, every month, even) to get around the reporting requirements. So while I don't think the IRS is necessarily looking for it, I would expect that if they did at some point, they could easily find most gift transfers/checks. Although now I guess the important question is, how long do they keep that information?

Well they can certainly find transfers. How do they determine gifts?

[audreyh1]

Quote:

Originally Posted by cathy63 If one half of the gifts comes from each of you, then you can file a joint form 709 instead of filing two forms. You just check the box to indicate the 50/50 split, enter both spouse's SSNs and both sign.

I read the IRS stuff and it said that each of us had to file a 709, because each of us has an estate exemption limit that we are gifting against.

[cathy63]

Quote:

Originally Posted by audreyh1 I read the IRS stuff and it said that each of us had to file a 709, because each of us has an estate exemption limit that we are gifting against.

You're right. I just read the instructions, and I see that when we did this years ago, we actually met the exception criteria so we only had to file one return. If you don't qualify, then you do have to file separate returns.

[The Cosmic Avenger]

Quote:

Originally Posted by audreyh1 Well they can certainly find transfers. How do they determine gifts?

I'm just saying, if there is a reason for them to look back, they might be able to find the total, and then it might be on us to prove that we were, say, paying our adult child(ren) for something rather than gifting money. If it wasn't declared as income, there's no rental agreement between payer and payee, and there's no promissory note, it would be hard to argue that it's not a gift....I can't imagine any other reasons for transfers that aren't gifts off the top of my head.

[RunningBum]

Quote:

Originally Posted by The Cosmic Avenger Remember, any transfer over $10K has to be reported by the bank to the IRS as potential money laundering, and even lower but frequent transfers can be flagged, so you can't just do $9K every day (or, probably, every month, even) to get around the reporting requirements. So while I don't think the IRS is necessarily looking for it, I would expect that if they did at some point, they could easily find most gift transfers/checks. Although now I guess the important question is, how long do they keep that information?

I thought that was cash? In any case I would definitely report anything over $10K. When I think of things that could derail retirement but are easily avoided, tax fraud is up there. Not worth it.

[audreyh1]

Quote:

Originally Posted by RunningBum I thought that was cash? In any case I would definitely report anything over $10K. When I think of things that could derail retirement but are easily avoided, tax fraud is up there. Not worth it.

Yes, I think that’s cash deposits. There is also a reporting requirement for international transfers (received?) over $10K.

[meierlde]

Quote:

Originally Posted by audreyh1 OK, I see what you mean now. We are also filing 2020 forms 709 - one for each of us as we are treating the gifts as coming from both. That $11M+ estate exemption applies to individuals. No, there is no easy way for them to find out. Yet it hadn’t occurred to us not to file. I expect some don’t, just like other obscure tax declarations.

It should be noted that this is mostly a problem for your executor, as the reconcilliation will not come due till the time a form 706 is due (the estate tax form) (Unless you exceed 11 million in gifts before then but then a good tax professional is likely involved)

[Gill]

Quote:

Originally Posted by The Cosmic Avenger Remember, any transfer over $10K has to be reported by the bank to the IRS as potential money laundering, and even lower but frequent transfers can be flagged, so you can't just do $9K every day (or, probably, every month, even) to get around the reporting requirements. So while I don't think the IRS is necessarily looking for it, I would expect that if they did at some point, they could easily find most gift transfers/checks. Although now I guess the important question is, how long do they keep that information?

The banks report cash transfers, not checks.
Gill

[Souschef]

I just filled out the 709, but will not mail it in until March. It is for a substantial sum (6 figures). I am slightly paranoid about the IRS, having had to respond to 2 previous letters from them.
Are they going to come at me to ask where I got the money from (I have the documentation), or am I just worrying too much?

[cathy63]

Quote:

Originally Posted by Souschef I just filled out the 709, but will not mail it in until March. It is for a substantial sum (6 figures). I am slightly paranoid about the IRS, having had to respond to 2 previous letters from them. Are they going to come at me to ask where I got the money from (I have the documentation), or am I just worrying too much?

No, nobody cares where you got the money. A gift tax return is auditable, but that would only be of interest if they thought you were actually giving gifts in the 7-figure range and under-reporting them.

[street]

We have to do the 709 for 2020 also. I hope all goes well and no issues with IRS. It seems at times through the years even if done right/legal it still can be interesting dealing with Gov. agencies. That isn't meant to be a negative response but I'm looking at both sides of the coin.

[Bogie]

I talked to an accountant about the ins and outs of the reporting and I asked him what happens if they lower the lifetime exemption from what is is now back to say $1mil lifetime. He said they wouldn't do that.... but they could.