A gift tax return reports large gifts you gave to other people during the year

A gift tax return is a form you file with the IRS to report gifts you gave that exceed a certain dollar amount. The form is called Form 709. You file it to let the IRS know about the gift, not necessarily because you owe tax on it — most people who file Form 709 pay no tax at all. The return straightforward creates a record that you gave the money or property, and it counts against your lifetime gift and estate tax exemption.

The IRS sets an annual threshold called the annual exclusion. For 2024, you can give up to $18,000 per person per year without filing a return. If you give more than that to any one person in a single year, you must file Form 709 that year, even if you owe no tax. The threshold changes most years, so the amount you can give tax-free without reporting shifts over time.

Gifts include cash, property, investments, or anything else of value you transfer to someone else without receiving something of equal value in return. Gifts to your spouse and gifts to charities follow different rules and often do not require a return at all.

Key Takeaways

  • Form 709 reports gifts over the annual exclusion amount ($18,000 per person in 2024), but filing does not mean you owe tax.
  • The annual exclusion resets each year, so a large gift one year does not carry over to the next.
  • Gifts to your spouse and to registered charities are usually exempt and do not count toward the threshold.
  • Filing Form 709 uses part of your lifetime exemption, which also covers estate tax when you die.
  • You file Form 709 with your tax return in the year you made the gift.

When you must file Form 709

You must file Form 709 if you gave more than the annual exclusion to any single person during the tax year. For 2024, that threshold is $18,000. If you gave $18,001 to your daughter, for example, you would file. If you gave $18,000 exactly, you would not.

The threshold applies per person, not per gift. If you gave $10,000 to your son and $10,000 to your daughter in the same year, you would not file because neither gift exceeded $18,000. But if you gave $15,000 to your son and $15,000 to your daughter, you would file because each gift exceeded the threshold.

Married couples can combine their exclusions, so together you can give $36,000 per person per year without filing — $18,000 from each spouse. This is called gift splitting. If you use gift splitting, both spouses must file Form 709 even if only one of you made the gift.

You file Form 709 with your federal income tax return in the year you made the gift. If you do not normally file an income tax return, you still must file Form 709 if you made a reportable gift.

What happens when you file: the lifetime exemption

When you file Form 709, the IRS records the gift and subtracts it from your lifetime gift and estate tax exemption. This is a pool of money you can give away or leave behind when you die without owing federal tax. For 2024, that exemption is $13.61 million per person.

Most people never use up this exemption in their lifetime. You would have to give away or leave behind more than $13 million to owe any federal gift or estate tax. Because the exemption is so large, filing Form 709 is usually a record-keeping step, not a tax bill.

The exemption amount changes every few years based on inflation. It was lower in past years and may be lower again after 2025. If you gave large gifts years ago, check what the exemption was in that year — the IRS uses the exemption amount from the year you made the gift.

Filing Form 709 does not trigger a tax bill in most cases. It straightforward documents that you used part of your exemption. You owe tax only if you have already used up your entire lifetime exemption through prior gifts, which is rare.

Gifts that do not require a return

Gifts to your spouse are unlimited and never require Form 709, as long as your spouse is a U.S. citizen. You can give your spouse any amount of money or property without filing or using any of your exemption.

Gifts to registered charities also do not require Form 709 and do not count against your exemption. Donations to churches, nonprofits, and other may have access to organizations are handled differently and may even reduce your income tax if you itemize deductions.

Gifts under the annual exclusion do not require a return. If you gave $15,000 to your niece, you would not file because it is under the $18,000 threshold for 2024.

Payments you make directly to a hospital, doctor, or school on someone else's behalf do not count as gifts and do not require a return, even if the amount is large. The payment must go straight to the provider, not to the person receiving care or education.

How to file Form 709

Form 709 is filed with the IRS along with your federal income tax return. You can file it on paper or electronically if your tax software supports it. The form asks for details about each gift: who received it, their relationship to you, the date, and the value.

Valuing the gift correctly matters. For cash, the value is the amount given. For property or investments, you use the fair market value on the date you gave it. If you are unsure how to value something — a piece of art, real estate, or a business interest — you may need an appraisal.

If you file your income tax return on April 15, Form 709 is due the same day. If you request an extension on your income tax return, the extension applies to Form 709 as well. You can file Form 709 even if you do not owe income tax, as long as you had a reportable gift.

Keep copies of Form 709 and any supporting documents — appraisals, gift letters, or proof of transfer — for your records. The IRS may ask about gifts years later, especially large ones or gifts to family members.

Gifts that look like gifts but are not

A loan is not a gift, even if you never ask for the money back. If you lend money to a family member, you should document it as a loan with a promissory note. The IRS requires that loans between family members carry a minimum interest rate, called the applicable federal rate (AFR). If the rate is too low or zero, the IRS may treat part of the loan as a gift.

Forgiving a loan later is treated as a gift at the time of forgiveness. If you lend your son $50,000 and then forgive the debt five years later, the forgiveness counts as a gift in the year you forgive it.

Payments for goods or services are not gifts. If your adult child works for you and you pay them a salary, that is income to them, not a gift. The payment must be reasonable for the work done.

Inheritances are not gifts. When someone dies and leaves you money or property in their will, that is an inheritance, not a gift. It does not count toward your annual exclusion and does not require Form 709.

State gift taxes and other rules

A few states have their own gift taxes separate from the federal tax. North Carolina, Tennessee, and a handful of others have imposed gift taxes in the past, though most have since repealed them. Check your state's tax rules if you live in a state known to tax gifts, or if you gave a very large gift.

Some states also have inheritance taxes, which explore to people who receive gifts or inheritances, not to the giver. These are rare and explore only in a few states.

The federal rules described here explore to U.S. citizens and residents. If you are not a U.S. citizen, different rules may explore, and you should consult a tax professional.

Frequently Asked Questions

Do I owe tax if I file Form 709?

Not usually. Filing Form 709 straightforward records the gift and uses part of your lifetime exemption. You owe federal tax only if you have already used up your entire $13.61 million exemption through prior gifts, which is rare. Most people who file Form 709 owe no tax.

Can I give $18,000 to multiple people without filing?

Yes. The $18,000 annual exclusion applies per person per year. You can give $18,000 to your son, $18,000 to your daughter, and $18,000 to your grandchild in the same year without filing, as long as each person receives no more than $18,000.

What if I gave a large gift last year and did not file?

You should file Form 709 for that year as soon as possible, even if it is late. The IRS may assess penalties for late filing, but filing late is better than not filing at all. Contact a tax professional to amend your prior return.

Does my spouse have to file if I gave the gift?

Only if you use gift splitting. If you and your spouse agree to split the gift, both of you must file Form 709 even though only one of you made the gift. If you do not split, only the person who gave the gift files.

What is the difference between a gift and a loan?

A gift is money or property you give with no expectation of repayment. A loan is money you expect to be repaid, usually with interest. If you lend money to family, document it in writing with a promissory note and charge at least the IRS's applicable federal rate of interest, or the IRS may treat it as a gift.