Form 709 - Gift and Generation-Skipping Transfer Tax Return
Form 709, the "United States Gift (and Generation-Skipping Transfer) Tax Return," is not used for individual income tax returns. Instead, it is a separate form specifically designed for reporting gifts and generation-skipping transfers.
What is Form 709?
Form 709 is used to report:
- Gifts: Transfers of property made without receiving adequate compensation in return. These can include direct gifts, gifts made through trusts, and transfers of certain types of property.
- Generation-Skipping Transfers: Transfers of wealth to individuals who are two or more generations below the donor, such as grandchildren or great-grandchildren, potentially subjecting them to different tax rules.
Key Sections of Form 709
- Part 1: General Information
This section captures basic information about the donor and the recipient(s), including names, addresses, and the relationship between the donor and recipients.
- Part 2: Tax Computation
Here, you calculate the gift tax due. This involves applying the gift tax rates to the value of gifts given, taking into account any exclusions or deductions.
- Part 3: Gifts to Spouses
This section deals with gifts made to a spouse, including those made under the unlimited marital deduction and any relevant exclusions or adjustments.
- Part 4: Generation-Skipping Transfers
If you made transfers to skip persons, you’ll need to detail these transfers and apply the GST tax rates and exemptions.
- Part 5: Other Information
This includes additional information about gifts, such as the description of property transferred and the method used to determine the value.
Understanding and correctly filing Form 709 is essential for any individual making significant gifts or planning for generational wealth transfer.