KPM

Retirement Account Required Minimum Distributions Vacation Property Rentals Affecting Your Taxes Social Security Benefit Taxation Tax Implications of Unemployment Unused 529 College Funds IRA Contribution Gift Tax Return Difference Between Filing Jointly Or Separately Substantiation For Your 2023 Charitable Donations IRA Questions Filing 2023 Tax Year Returns Kiddie Tax Rules Medical Expense Tax Deduction Tax Obligations Of Moving To Another State How Are Court Awards & Out-Of-Court Settlements Taxed Nanny Tax Reduce Your 2023 Tax Bill FSA 2024 Inflation-Adjusted Federal Tax Amounts 10% Penalty Tax Restricted Stock 401(K) Plan SECURE 2.0 Scholarships Considered Taxable Income Casualty Loss Tax Deductions Tax Implications HSA Investment Gift Tax Selling your home Employer-Provided Life Insurance ABLE account Student Loan Interest Tax Breaks Catch-Up Contributions Tax Text Or Email From The IRS

Are You Ready For The 2021 Gift Tax Return Deadline?

If you made large gifts to your children, grandchildren, or other heirs last year, it’s important to determine whether you’re required to file a 2021 gift tax return. And in some cases, even if it’s not required to file one, it may be beneficial to do so anyway.

Who Must File?

The annual gift tax exclusion has increased in 2022 to $16,000 but was $15,000 for 2021. Generally, you must file a gift tax return for 2021 if, during the tax year, you made gifts:

  • That exceeded the $15,000-per-recipient gift tax annual exclusion for 2021 (other than to your U.S. citizen spouse)
  • That you wish to split with your spouse to take advantage of your combined $30,000 annual exclusion for 2021
  • That exceeded the $159,000 annual exclusion in 2021 for gifts to a noncitizen spouse
  • To a Section 529 college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($75,000) into 2021
  • Of future interests — such as remainder interests in a trust — regardless of the amount
  • Of jointly held or community property

Keep in mind that you’ll owe gift tax only to the extent that an exclusion doesn’t apply and you’ve used up your lifetime gift and estate tax exemption ($11.7 million for 2021). As you can see, some transfers require a return even if you don’t owe tax.

Why You Might Want To File
No gift tax return is required if your gifts for 2021 consisted solely of gifts that are tax-free because they qualify as:

  • Annual exclusion gifts
  • Present interest gifts to a U.S. citizen spouse
  • Educational or medical expenses paid directly to a school or health care provider
  • Political or charitable contributions

But if you transferred hard-to-value property, such as artwork or interests in a family-owned business, you should consider filing a gift tax return even if you’re not required to. Adequate disclosure of the transfer in a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file.

The Deadline Is April 18
The gift tax return deadline is the same as the income tax filing deadline. For 2021 returns, it’s April 18, 2022 or October 17, 2022, if you file for an extension. But keep in mind that, if you owe gift tax, the payment deadline is April 18, regardless of whether you file for an extension. If you’re not sure whether you must (or should) file a 2021 gift tax return, contact us.

Related Articles

Talk with the pros

Our CPAs and advisors are a great resource if you’re ready to learn even more.