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Gift form 709 question

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  • Avatar pulmccmdoc 
    Participant
    Status: Physician
    Posts: 5
    Joined: 06/05/2019

    hi, i am new to the forum and this is my first post

    in 2018 i opened 529 account for my 2 yr old daughter. I funded that account with 45K$ (unaware of the annual 15000$ limit beyond which i have to pay gift tax). i tried to do some research on how to avoid gift tax and came to know about gift form 709. I need help with filing it.

    my questions is

    1) When should this form 709 be filed? with 2018 income tax filing? is there a deadline regarding when to file it?

    2) I wish i could upload the form to get input regarding what numbers to enter in which field. since i cannot do that, i would like to know – a) in part 2 – tax computation area, the fields will be zero value, correct? b) in that form under schedule A on page 2, where it says donor adjusted basis of gift – should the amount entered be 45000 or 45000-15000 (allowed annual gift limit)=30000 and split it 1/2 ways between me and my wife? c) schedule B,C,D should be vacant?

     

    #219571 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8128
    Joined: 01/09/2016

    Welcome to the forum!

    You do not have to “pay” gift tax if you go over the limit, you just have to file a Form 709 and report your gifts. In most cases, going over the limit in a single year will reduce your lifetime exclusion (don’t need to go into that here), but there is a special exemption for 529 contributions that allows you to gift up to 5 years in a single year (or $75k) without reducing your exclusion. You still have to report, which is what you are doing.

    Your basis is the same as the amount of the gift, you don’t have to split 2 ways in this situation, and you owe zero tax.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #219579 Reply
    Avatar pulmccmdoc 
    Participant
    Status: Physician
    Posts: 5
    Joined: 06/05/2019

    thank you for the reply. could you tell me 1) when should this form 709 be filled – since I funded the 529 account in 2018, should it be filed with 2018 income tax? or it can be filed anytime ? 2) should the basis be 45k (the amount I funded) or 30k (which is 45k-15k ) ? 3) since I funded 45k in 2018, can I keep superfunding the account in 2019 also? I would like to super fund the account for my another daughter also, do I file separate form 709 per year per child?

     

     

    #220713 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8128
    Joined: 01/09/2016

    thank you for the reply. could you tell me 1) when should this form 709 be filled – since I funded the 529 account in 2018, should it be filed with 2018 income tax? or it can be filed anytime ? 2) should the basis be 45k (the amount I funded) or 30k (which is 45k-15k ) ? 3) since I funded 45k in 2018, can I keep superfunding the account in 2019 also? I would like to super fund the account for my another daughter also, do I file separate form 709 per year per child?

    Click to expand…
    • The due date of the 529 for 2018 was 4/15/19.
    • The basis is $45k.
    • You and your wife can gift her a total of $5k more this year then back to $15k each next year.

    If you have more questions, you really need to be working with a CPA or CFP. Probably do, anyway.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #220716 Reply
    Liked by ENT Doc
    Craigy Craigy 
    Participant
    Status: Spouse
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    Joined: 09/16/2016

    If you have more questions, you really need to be working with a CPA or CFP. Probably do, anyway.

    Click to expand…

    +1, I would not attempt to file a 709 without using a tax professional.

    LEVEL 1 WCI FORUM MEMBER.

    #220766 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

    If you have more questions, you really need to be working with a CPA or CFP. Probably do, anyway.

    Click to expand…

    +1, I would not attempt to file a 709 without using a tax professional.

    Click to expand…

    can TT not handle this fairly easily?

    i’ve never tried it

    #220782 Reply
    Avatar pulmccmdoc 
    Participant
    Status: Physician
    Posts: 5
    Joined: 06/05/2019

    My CPA isnt familiar with 709 form filing. can you assist? how much do you charge? i already have it filed, i just want to know if its good to go.

    #220856 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2509
    Joined: 05/01/2017

    My CPA isnt familiar with 709 form filing. can you assist? how much do you charge? i already have it filed, i just want to know if its good to go.

    Click to expand…

    time for new CPA.

    not kidding at all.

    #220871 Reply
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1799
    Joined: 01/08/2016

    Well, I’m glad to hear Craigy mention a professional…I got a line item charge from my cpa for the 709. I thought it was ridiculous, but a glance at the form and I just signed the check and moved on.

    #220897 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3515
    Joined: 01/14/2017

    Form 709 isn’t that bad. I still think the forms and accounting for all items re: sale of an investment property are far worse.

    #220912 Reply
    Liked by G
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8128
    Joined: 01/09/2016
    Form 709 isn’t that bad. I still think the forms and accountin

    Click to expand…

    I agree, it’s not that bad, but it can be pretty confusing.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #220918 Reply
    Liked by ENT Doc
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1799
    Joined: 01/08/2016

    Greaaaatttt…thanks for the warning, ENTDoc.

    #220921 Reply
    Liked by ENT Doc

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