Today TaxMama® hears from Ivan in the TaxQuips Forum who seems to be concerned. “I have found lots of info on filing gift tax returns – penalties – life time exclusions. But what I cannot find is, what if someone makes a gift(s) to a child, or anyone else, in an amount well over the $13,000 annual exclusion – and fails to file a gift tax return, even though no gift tax is due?”
If you have made such a gift, then, simply file the gift tax return late.
It is important to file it for a variety of reasons. The most important of which is, the gift tax IS due, UNLESS you elect to use part of your lifetime exclusion. You cannot make that election without filing the gift tax return. That’s the only way to make the gift non-taxable.
The other two important reasons are:
1) The person receiving the gift needs to be able to prove it was a gift, rather than unreported income. Your gift tax return helps corroborate that person’s claim that this was a gift, if ever audited.
2) Did you know that if a gift tax should have been filed and wasn’t, the donee (the recipient) may be liable for the gift tax?
Just file the gift tax return late so you can stop researching and forget about it.
Clearly, this has been bothering you. Now you can stop losing sleep.
And remember, you can find answers to all kinds of questions about gift taxes and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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