Do I have to file a gift tax return?

Question

I signed two vehicles over to a car dealership as trade-in allowance on a car for my newly married daughter. The cars were given a trade-in allowance of $7400. Do I need to file a gift tax return on these? It would be as if I gave her $7400. I know the exclusion limit is $12,000, so I wouldn't owe any tax on it, but nonetheless, do I have to report it on Form 709?

Answer 1

This is from the IRS website:

Who Must File
In general. If you are a citizen or resident of the United States, you must file a gift tax return (whether or not any tax is ultimately due) in the following situations.

If you gave gifts to someone in 2006 totalling more than $12,000, (other than to your spouse) you probably must file Form 709. But see page 2 for information on specific gifts that are not taxable and for gifts to your spouse.

Certain gifts, called future interests, are not subject to the $12,000 annual exclusion and you must file Form 709 even if the gift was under $12,000. See Annual Exclusion on page 2.

A husband and wife may not file a joint gift tax return. Each individual is responsible for his or her own Form 709.

You must file a gift tax return to split gifts with your spouse (regardless of their amount) as described in Part 1—General Information on page 4. Form 709-A, United States Short Form Gift Tax Return, is obsolete.

If a gift is of community property, it is considered made one-half by each spouse. For example, a gift of $100,000 of community property is considered a gift of $50,000 made by each spouse, and each spouse must file a gift tax return.

Likewise, each spouse must file a gift tax return if they have made a gift of property held by them as joint tenants or tenants by the entirety.

Only individuals are required to file gift tax returns. If a trust, estate, partnership, or corporation makes a gift, the individual beneficiaries, partners, or stockholders are considered donors and may be liable for the gift and GST taxes.

The donor is responsible for paying the gift tax. However, if the donor does not pay the tax, the person receiving the gift may have to pay the tax.

If a donor dies before filing a return, the donor's executor must file the return.


Who does not need to file. If you meet all of the following requirements, you are not required to file Form 709:
You made no gifts during the year to your spouse,

You did not give more than $12,000 to any one donee, and

All the gifts you made were of present interests.

Good luck & hope this helps

Answer 2

If the gift taxes exceed the annual exclusion amount, then there will definitely be some penalties involved. However, I have not had a great deal of experience with gift taxes... The IRS.GOV site will definitely have what you need to see what you should do, and what your father should have done.

Answer 3

No. The only reason to file the gift tax return is to report and pay the dax. If there is no tax liability, there is no reason to file a gift tax return.

Answer 4

No you don't. You're under the limit to have to fill out a gift tax return.