Question

Gift Tax

Forum|Forum|6 years ago
January 15, 2020
1 reply
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For the past several years, I have been helping my daughter with her expenses while she started a new business in New York. My contributions were not included in any of her returns. I've tracked these payments in 'Mint', so I have a record of each transaction (i.e., credit cards, bank statements, etc.). In December of 2019, I transferred the remaining amount of her college fund from her name to mine. The amount transferred was the same as the total expenses paid to her. Can I simply call the transfer a reimbursement of expenses paid and disregard form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return)? I've read where each of us has an $11M limit before gift taxes apply, but this form appears so complicated I would need a tax accountant to complete the form.

A

Anonymous_

Employee

@pburke0925 wrote:

My contributions were not included in any of her returns.

Although the contributions would not be included in her returns, a Form 709 should have been filed if the annual exclusion had been exceeded for any given tax year.

However, there is typically not much of a penalty for failing to file a gift tax return when there is no tax due.

P

pburke0925Author

Years ago, I set up a college fund in my daughter's name that she paid taxes on gains every year. In 2019, we transferred those $s (more than $15k) from her name to mine (as reimbursement for previous years contributions). Does she also have to complete a Form 709 for this transfer?

Hal_Al

Employee

"Gift Tax" is somewhat of a misnomer. Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html

For 2019, a gift of more than $15,000 triggers the need for a gift tax return. I assume the "college fund" you sat up was a UTMA/UGMA ("she paid taxes on gains every year"). The money is legally hers, even though you are the custodian of the account. As such, a gift tax return is required if she gives the money back to you.