Understanding the Gift Tax Form: A Comprehensive Guide

Navigating the complexities of tax forms can be daunting, and the Gift Tax Form is no exception. This guide aims to clarify the intricacies of the gift tax form, officially known as Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Whether you’re a first-time filer or seeking a deeper understanding, this comprehensive resource will walk you through each section, ensuring you’re well-equipped to handle your gift tax obligations.

I. Part I: General Information – Your Foundation for Filing

This initial section of the gift tax form gathers essential details about you, the donor. Accuracy here is paramount as it establishes your identity and filing status with the IRS.

Line 3. Donor’s Social Security Number (SSN) or ITIN

This line is crucial for identification. Enter your Social Security Number (SSN). If you don’t have an SSN, and have previously filed US tax returns using an Individual Taxpayer Identification Number (ITIN), use your ITIN. For those without either an SSN or a previously used ITIN, the IRS will assign you an Internal Revenue Service Number (IRSN). If you have already been assigned an IRSN, ensure you input it here. If none of these apply, leave line 3 blank. The IRS will guide you if further identification is needed.

Lines 4–11. Your Address Details

Provide your current and complete mailing address in lines 4 through 11.

Foreign Address: If your mailing address is outside the United States, carefully enter the city name on the designated line. Do not include any other information on this line. Complete the subsequent lines with the remaining address details, ensuring you spell out the country name fully without abbreviations. Adhere to the postal code and province/county/state conventions of the respective country.

P.O. Box: Only use a P.O. Box if the postal service does not deliver mail directly to your home address.

Line 12. Legal Residence (Domicile) Explained

Domicile, for gift tax purposes, is more than just where you are currently living. It’s about your intended permanent home. According to the IRS, you establish domicile in a location, even briefly, if you reside there without a definite intention to move elsewhere in the future. Enter the U.S. state (including Washington D.C.) or foreign country where you are legally domiciled at the time you make the gift.

Line 13. Citizenship Status

Specify your citizenship accurately. The definition of a “citizen of the United States” for gift tax purposes has specific criteria. You are considered a U.S. citizen if, at the time of making the gift, you:

Were domiciled in a U.S. territory,
Were a U.S. citizen, and
Became a U.S. citizen for reasons other than being a citizen of a U.S. territory or birth/residence in a territory.

If you meet all of these conditions, enter “United States”. Otherwise, enter the name of your country of citizenship.

Line 19. Gift Splitting with Your Spouse

This is a significant election for married couples. If you and your spouse agree to treat all gifts made during the calendar year as if each of you made half, check “Yes”. This is known as gift splitting and can be advantageous for tax planning. If you choose “Yes”, you must complete Part III, “Spouse’s Consent on Gifts to Third Parties.” If you are not married or do not wish to split gifts, skip to line 20.

Line 20. Application of Deceased Spousal Unused Exclusion (DSUE) Amount

This line addresses a provision that can significantly impact your gift tax liability. If you are a U.S. citizen or resident and your spouse passed away after December 31, 2010, you might be eligible to utilize their Deceased Spousal Unused Exclusion (DSUE) amount. This is a portable exclusion amount, but it requires a formal election by the executor of the deceased spouse’s estate on Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return).

If the executor made this portability election, you should attach the first four pages of the Form 706 filed by the estate to your Form 709. Include any attachments related to DSUE and calculations of adjustments, such as audit reports or previously filed Form 709s. Refer to Rev. Proc. 2022-32 for updates on late DSUE election procedures.

Indicate using the checkboxes whether you are applying or have previously applied a DSUE amount from a predeceased spouse to gifts reported on this or a prior Form 709. If you are using DSUE, you must complete Schedule C, “Portability of Deceased Spousal Unused Exclusion (DSUE) Amount,” before proceeding to Part II, “Tax Computation.”

Line 21. Digital Assets Disclosure

With the increasing prevalence of digital assets, this line specifically addresses their inclusion in gifts. If you are reporting any transfer on Form 709 that includes a digital asset, or a financial interest in one, you must answer “Yes” to this question. Do not leave it blank. Answer either “Yes” or “No” by checking the appropriate box.

II. Part III: Spouse’s Consent on Gifts to Third Parties – For Gift Splitting Couples

This section is exclusively for those who indicated “Yes” to gift splitting on line 19 of Part I.

It’s important to understand that even with gift splitting, married couples cannot file a joint gift tax return. Each spouse must file an individual return. However, filing both returns together can aid the IRS in processing and prevent potential correspondence.

Gift splitting allows a gift made by one spouse to be considered as made one-half by each spouse. This can be beneficial as it potentially doubles the annual gift tax exclusion and utilizes both spouses’ applicable exclusion amounts. For gift splitting to be valid, all of the following conditions must be met:

You and your spouse must have been legally married to each other at the time of the gift.
If divorced or widowed after making the gift, you must not have remarried during the remainder of the calendar year.
Neither spouse could have been a nonresident alien or not a U.S. citizen at the time of the gift.
You must not have given your spouse a general power of appointment over the transferred property.

If you transferred property partly to your spouse and partly to other individuals (third parties), gift splitting is permissible only if the portion given to third parties is clearly determinable at the time of the gift.

Consent to gift splitting applies to the entire calendar year. Therefore, all gifts made by either spouse to third parties during the year while married must be split. If you consent, both spouses become jointly and severally liable for the entire gift tax for all split gifts.

If you meet these requirements and wish to split gifts, check “Yes” on line 1 of Part III and complete lines 2 through 7.

Line 4. Marriage Duration in 2024

Indicate whether you were married to the same spouse for the entire calendar year of 2024. If “Yes,” check the “Yes” box and skip to line 6. If you were married for only part of the year, check “No” and proceed to line 5. Note that if you divorced or became widowed after making the gift and remarried before the end of 2024, you are ineligible to elect gift splitting.

Line 5. Marital Status Change

If you answered “No” to line 4, check the box that accurately describes the change in your marital status during the year (married, divorced, or widowed) and provide the specific date of the event.

Line 7. Consent of Spouse – Formalizing Gift Splitting

To formally consent to gift splitting, both you and your spouse must indicate consent. This is done by checking the checkbox on line 7 and, importantly, attaching a “Notice of Consent” to Form 709. Your spouse (the consenting spouse) must sign and date this notice to validate the gift-splitting election.

The Notice of Consent must include a clear statement that the consenting spouse agrees to treat all gifts made to third parties as being made one-half by each spouse.

Filing Requirements: If only one spouse is required to file a gift tax return, only one Notice of Consent is needed, attached to the donor spouse’s return. If both spouses must file returns, each should execute a Notice of Consent to be attached to the donor spouse’s return.
Timing of Consent: Generally, the Notice of Consent can be signed anytime after the end of the calendar year. However, there are critical exceptions:
1. Consent cannot be obtained after April 15th following the close of the gift year, unless neither spouse has filed a gift tax return by this date. In that case, consent must be made on the first gift tax return filed by either spouse for the year.
2. Consent is not allowed after a notice of deficiency for gift tax has been sent to either spouse for the year.
Executor or Guardian Consent: In cases where a spouse is deceased or legally incompetent, the executor of the deceased spouse’s estate or the guardian of the incompetent spouse can indicate consent.

When the Consenting Spouse Must Also File a Gift Tax Return

Generally, electing gift splitting necessitates both spouses filing their own individual gift tax returns. However, there are two exceptions where only one spouse (the donor spouse) needs to file. In these exceptions, “gifts” refer to transfers that do not qualify for the political organization, educational, or medical exclusions.

Exception 1: Only the donor spouse needs to file if during the calendar year:

Only one spouse made any gifts,
The total value of gifts to each third-party donee does not exceed $36,000, and
All gifts were of present interests.

Exception 2: Only the donor spouse needs to file if during the calendar year:

Only one spouse (the donor spouse) made gifts exceeding $18,000 but not more than $36,000 to any third-party donee,
The other spouse (consenting spouse) only made gifts of not more than $18,000 to third-party donees who were different from those the donor spouse gifted to, and
All gifts by both spouses were of present interests.

If either of these exceptions is met, only the donor spouse files a return, and the consenting spouse signifies consent on that return. Further instructions for Part II, “Tax Computation,” and Schedules A, B, C, and D will be discussed later in this guide.

III. Schedule A: Computation of Taxable Gifts – Detailing Your Transfers

Schedule A is where you meticulously list all gifts subject to gift tax. It’s crucial to understand what constitutes a taxable gift and how to properly report it here. Remember, gifts qualifying for political organization, educational, or medical exclusions should not be entered on Schedule A.

Line A. Disclosure of Valuation Discounts

Valuation discounts are common in gift tax, particularly for gifts of business interests or real estate. If you’ve applied any discount to the value of a gift reported in Schedule A (Parts 1, 2, or 3), such as for lack of marketability, minority interest, fractional interest in real estate, blockage, or market absorption, you must answer “Yes” to the question at the top of Schedule A. Crucially, you must also attach a detailed explanation justifying the discount, including the basis for it and the exact discount amount taken.

Line B. Qualified Tuition Programs (QTPs) – 529 Plans

Contributions to 529 plans, also known as Qualified Tuition Programs (QTPs), have specific gift tax rules. For 2024, if you contributed more than $18,000 to a QTP for any single person, you can elect to spread the gift over five years. This election allows you to treat up to $90,000 of the contribution as if it were made ratably over a 5-year period, applying the annual exclusion each year, starting in 2024. This election can be made for multiple beneficiaries.

Maximum Election: The election is capped at $90,000 per beneficiary. Any contribution exceeding $90,000 for a person in 2024 (plus any other gifts to that person) must be reported in full in 2024.
Reporting Over 5 Years: For each of the five years, you will report one-fifth (20%) of the elected amount in Part 1 of Schedule A. In column (e) of Part 1, use the calendar year for which you are filing Form 709 as the “date of gift,” not the actual contribution year for subsequent years.
Example Scenario: If, in 2024, you contribute $100,000 to a QTP for person A and elect 5-year spreading for $90,000, you’d report $28,000 in Part 1 of Schedule A for 2024: $10,000 (excess over $90,000) + $18,000 (1/5th of $90,000). In 2025, if you make a $20,000 cash gift to person B, you’d report both the $20,000 to B and $18,000 (another 1/5th portion for person A) on your 2025 Form 709, listing “2025” as the gift date for the QTP portion. If in subsequent years (2026-2028) you make no other gifts requiring a Form 709, you are not obligated to file solely to report the remaining QTP portions.

To make this election, check the box on line B at the top of Schedule A. This election must be made for the year of contribution. You must also attach an explanation including:

The total contribution amount per beneficiary.
The amount for which you are making the 5-year election.
The beneficiary’s name.

If you are splitting gifts with your spouse, the gift-splitting rules are applied before applying the QTP rules. Each spouse then individually decides whether to make the QTP election.

It’s important to note that contributions to QTPs do not qualify for the education exclusion for gift tax purposes.

How to Complete Parts 1, 2, and 3 of Schedule A

After determining which 2024 gifts are subject to gift tax, list them on Schedule A, dividing them into:

Part 1: Gifts Subject Only to Gift Tax
Part 2: Direct Skips Subject to Both Gift and GST Tax
Part 3: Indirect Skips and Other Transfers in Trust

If you need more space, use additional sheets in the same Schedule A format.

Follow these guidelines when listing gifts on Schedule A:

List each gift only once, in Part 1, 2, or 3.
Exclude gifts qualifying for political organization, educational, or medical exclusions.
Enter “Gifts made by spouse” only if you are splitting gifts and your spouse is also required to file Form 709.
In column (g), enter the full gift value (including spouse’s portion if applicable). If splitting gifts, the one-half portion is entered in column (h).

Gifts to Donees Other Than Your Spouse

You must always report gifts of future interests, regardless of value.

Gift Splitting Not Elected: If total present interest gifts to a donee exceed $18,000 in 2024, you must report all gifts to that donee, including those excluded under the annual exclusion. If the total is $18,000 or less, you don’t need to report present interest gifts (except future interests). Report these gifts in Part 1, 2, or 3.

Gift Splitting Elected: Report the entire value of every gift made during the year while married, even if splitting reduces the taxable portion below $18,000.

Gifts Made by Spouse (Split Gifts): If splitting gifts and your spouse also made gifts, list their gifts in the “Gifts made by spouse” section within Part 1, 2, or 3, reporting them in the same way as your own gifts.

Gifts to Your Spouse

Generally, gifts to your spouse are not reported on Schedule A, with specific exceptions.

Terminable Interests: Terminable interests are defined in Part 4 instructions, line 4. If all terminable interests given to your spouse qualify as life estates with power of appointment, you don’t need to report them on Schedule A. However, if you gifted any terminable interest that doesn’t qualify as a life estate with power of appointment, you must report all such gifts made to your spouse during the year on Schedule A.

Charitable Remainder Trusts: If you gift to a charitable remainder trust where your spouse is the only noncharitable beneficiary (besides yourself), this interest is not a terminable interest and shouldn’t be on Schedule A.

Future Interest: Generally, don’t report future interest gifts to your spouse unless they are also terminable interests requiring reporting. However, if you must file Form 709 due to present interest gifts to other donees, and you also gave a future interest to your spouse, report the entire gift (including the future interest to your spouse) on Schedule A, using the “Gifts Subject to Both Gift and GST Taxes” rules to determine Part 1, 2, or 3 placement.

Spouses Not U.S. Citizens: If your spouse is not a U.S. citizen and you gift a future interest, all gifts to them for the year must be reported on Schedule A. For present interest gifts to a non-citizen spouse, do not report them on Schedule A if the total yearly gifts are $185,000 or less, and gifts exceeding $18,000 would qualify for a marital deduction if your spouse were a U.S. citizen. If gifts exceed $185,000, report all gifts, even excludable portions.

Gifts Subject to Both Gift and GST Taxes

Certain gifts, known as direct skips, are subject to both gift tax and Generation-Skipping Transfer (GST) tax. These are typically gifts to grandchildren or more remote descendants, or to trusts that primarily benefit such individuals.

Definitions for GST Tax

Direct Skip: A transfer that meets three conditions:

Subject to gift tax (reportable on Schedule A).
Of an interest in property.
Made to a skip person.

All three conditions must be met for GST tax to apply. A gift is “subject to gift tax” if it must be listed on Schedule A. However, a nontaxable gift (a direct skip) to a trust for an individual is subject to GST tax unless:

No trust corpus or income can be distributed to anyone other than the beneficiary during their lifetime.
If the beneficiary dies before trust termination, the trust assets will be included in their gross estate.

Note: If the transferred property in a direct skip would have been in the donor’s estate had they died immediately after, it’s subject to an Estate Tax Inclusion Period (ETIP).

To determine if a gift “is of an interest in property” and “is made to a skip person,” you must classify the donee as a “natural person” or a “trust.”

Trust (for GST Tax): Broadly defined, including not just formal trusts but any arrangement with a similar effect, such as life estates with remainders, terms for years, and insurance/annuity contracts. Conditional transfers are also considered transfers in trust.

Interest in Property (for GST Tax): A gift to a natural person is always considered a gift of an interest in property. For trusts, a natural person has an interest if they have a present right to income or corpus, or are a permissible current recipient (e.g., possess a general power of appointment).

Skip Person: A natural person donee is a skip person if they are assigned to a generation two or more generations below the donor’s. A trust donee is a skip person if all interests in the property are held by skip persons, or if no one holds an interest, and future distributions/terminations can only be made to skip persons.

Nonskip Person: Any donee not classified as a skip person.

Determining the Generation of a Donee

Generation assignment is crucial for GST tax. It’s generally determined along family lines:

Lineal Descendants of Donor’s Grandparents: Generation difference is calculated by subtracting generations between grandparent and donor from generations between grandparent and descendant (donee).
Lineal Descendants of Spouse’s Grandparents: Similar calculation, using the spouse’s grandparent lineage.
Spouses: Spouses of individuals in categories 1 and 2 are assigned to the same generation. Spouses of the donor are in the donor’s generation.
Adoption/Half-Blood: Treated as whole-blood relationships.

For those not assigned to a generation under these rules, generation is based on birth date relative to the donor:

Born within 12.5 years of donor: Donor’s generation.
Born 12.5 – 37.5 years after donor: First generation younger.
Subsequent 25-year intervals define further generations.

If multiple rules apply, the youngest generation assignment prevails. Entities (estates, trusts, partnerships, corporations) as donees are treated as passing the gift indirectly to those benefiting through the entity, who are then generation-assigned. Charitable organizations, certain trusts (sections 511(a)(2), 511(b)(2)), and governmental entities are in the donor’s generation, so transfers to them are not GST taxable and should be listed in Part 1 of Schedule A.

Generation Assignments under Notice 2017-15: This notice addresses generation assignments impacted by the Windsor decision, allowing taxpayers to adjust GST exemption allocated to transfers where generation assignments changed due to the ruling on same-sex marriage.

Charitable Remainder Trusts and GST Tax

Gifts to charitable remainder annuity trusts, unitrusts, and pooled income funds are not direct skips and thus not GST taxable at the time of gift. Always list these in Part 1 of Schedule A, even if all life beneficiaries are skip persons.

Generation Assignment with Deceased Intervening Parent

A special rule applies if you gift to a grandchild whose parent (your child) is deceased at the time of the gift. In this case, for GST purposes, the grandchild is treated as your child, not grandchild. Their children (your great-grandchildren) then become your grandchildren for GST tax purposes. This rule extends down lineal descendants.

This rule can also apply more broadly in cases of a deceased parent of the transferee, concerning descendants of the transferor’s parent. If property is transferred to such a descendant and their parent (a lineal descendant of the transferor’s parent) is deceased when the transfer is subject to gift or estate tax, the individual is treated as one generation below the lower of:

The transferor’s generation, or
The youngest living ancestor of the individual who is also a descendant of the transferor’s parent.

The same generation shift applies to any descendant of this individual. This rule does not apply to non-lineal descendants if the transferor has living lineal descendants at the time of transfer. If a trust transfer would have been a direct skip but for this rule, the rule also applies to trust distributions attributable to that property.

Ninety-Day Rule for Generation Assignment

For GST tax generation assignments, an individual who dies within 90 days of a transfer due to the transferor’s death is treated as having predeceased the transferor. This rule applies to transfers on or after July 18, 2005.

Examples Illustrating GST Rules

Example 1: Gifting a house to your daughter with remainder to her children. This is a gift in “trust.” The present interest goes to a nonskip person (daughter), so the trust is not a skip person, and the initial gift is not a direct skip. However, it’s an indirect skip, as GST tax may apply upon the daughter’s death when her interest terminates.

Example 2: Giving $100,000 to your grandchild. This is a direct skip, not in trust. List it in Part 2 of Schedule A.

Example 3: Establishing a trust to accumulate income for 10 years, then pay income to grandchildren for life, then distribute corpus to great-grandchildren. Since there are no current beneficiaries, there are no present interests. All future beneficiaries are skip persons (grandchildren, great-grandchildren), making the trust itself a skip person. List this gift in Part 2 of Schedule A.

Example 4: Trust paying income to grandchildren for 10 years, then corpus to children. Interests in trusts are defined as present interests only. All present interests are held by skip persons (grandchildren). The trust is a skip person. List the entire transfer in Part 2 of Schedule A, even though some ultimate beneficiaries (children) are nonskip persons.

Part 1: Gifts Subject Only to Gift Tax

List gifts subject only to gift tax in Part 1. Typically, gifts to spouses (if reportable), children, and charities are listed here.

Group gifts into:

Gifts to spouse.
Gifts to third parties split with spouse.
Charitable gifts (if not splitting gifts).
Other gifts.

If a transfer creates gifts to multiple individuals (e.g., life estate and remainder), list each separately. Number and describe all gifts in the provided columns.

Columns (b) through (d): Detailed Gift Description

Describe each gift with enough detail for easy identification.

Real Estate: Provide legal description, street address, and a brief description of improvements.

Bonds: Include number of bonds, principal amount, obligor name, maturity date, interest rate, interest payment dates, series number (if applicable), exchange listing or principal business office location (if unlisted), and CUSIP number.

Stocks: Give number of shares, common or preferred status, issue (if preferred), par value, quotation, corporation name, exchange listing or principal business office location (if unlisted), incorporation state and date, and CUSIP number.

Life Interests: For property interests based on lifespan, provide the person’s date of birth. For transfers involving closely held entities, include the EIN.

Life Insurance Policies: Include insurer name and policy number.

Clearly identify gifts creating an ETIP in the description column, describing the interest causing the ETIP. GST exemption allocations to ETIP property before ETIP closure are effective no earlier than the ETIP close date.

Column (e): Donor’s Adjusted Basis

Show the basis you would use for income tax purposes if the gift were sold or exchanged (generally, cost plus improvements, minus depreciation, etc.). See IRS Pub. 551, Basis of Assets, for more information.

Columns (f) and (g): Date and Value of Gift

Value gifts at their Fair Market Value (FMV) on the gift date (valuation date). FMV is the price a willing buyer and seller would agree upon, with both parties having reasonable knowledge and not being under duress. It’s not a forced sale price or a price from an uncommon market. Location is relevant.

For stocks and bonds (listed or unlisted), FMV is the mean of the highest and lowest selling prices on the valuation date. If only closing prices are available, it’s the mean of the closing price on the valuation date and the prior trading day. If no sales on the valuation date, use the mean of prices on the nearest trading dates before and after, prorating the difference back to the valuation date. If no sales, use bid and asked prices similarly. For closely held corporations or inactive stock, valuation is based on net worth, earnings, dividend capacity, and other factors. Real property value is best indicated by arm’s-length sales around the valuation date; if none, use comparable sales, adjusting for differences. Annuities, life estates, remainders, etc., are valued at present value on the gift date.

Sections 2701 and 2702 have special valuation rules for gifts of equity interests in corporations/partnerships or gifts in trust, if the donor (or family member) retains an interest after the transfer.

Column (h): Split Gifts

Enter amounts here only if you are splitting gifts with your spouse.

Split Gifts – Gifts Made by Spouses

If splitting gifts and your spouse made gifts being split with you, enter their gift information here in Part 1. If only you made gifts and are splitting them, leave this section blank. Generally, gift splitting requires splitting all gifts to third-party donees, except when you give your spouse a general power of appointment over a gift.

Supplemental Documents for Schedule A

You must provide documentation to support your gift valuations.

For closely held corporations or inactive stock, attach balance sheets (especially near the gift date) and 5 years of earnings, operating results, and dividend statements. For life insurance policies, attach Form 712, Life Insurance Statement.

Note for Single Premium or Paid-Up Policies: If the policy’s true economic value exceeds line 59 of Form 712 (e.g., surrender value is greater than replacement cost), report the full economic value on Schedule A.

For gifts made via trust, attach a certified trust instrument copy with the first return reporting a transfer to the trust. For subsequent transfers, a brief trust term description or copy is sufficient. Also, attach appraisals for real estate or other property. If you don’t attach this information, Schedule A must fully explain how values were determined.

Part 2: Direct Skips – GST Taxable Gifts

List gifts subject to both gift and GST tax in Part 2, in chronological order. Number, describe, and value them as in Part 1 instructions. For direct skips to trusts, list the entire gift as one line item.

Column (j): Section 2632(b) Election

If you elect out of automatic GST exemption allocation under section 2632(b)(3), check column (j) and attach a statement describing the transaction and the non-application extent. Filing a timely Form 709 and paying GST tax is considered such a statement.

Reporting GSTs After ETIP Closure: For GSTs after an ETIP closes (not due to donor’s death), do not include the ETIP transfer on Schedule A. Report it on Schedule D instead. Report other gifts on Schedule A as usual.

Split Gifts – Gifts Made by Spouse (Part 2)

See instructions under Part 1.

Part 3: Indirect Skips and Other Transfers in Trust – Potential Future GST Tax

Part 3 lists gifts to trusts that are initially only gift taxable but may later be subject to GST tax (upon distribution or termination).

Section 2632(c) defines indirect skips and special GST exemption allocation rules. An indirect skip is a gift tax-subject transfer (not a direct skip) to a GST trust. A GST trust could have a GST regarding the transferor unless it mandates certain corpus distributions to nonskip persons.

List indirect skips and transfers potentially subject to GST tax in Part 3, chronologically. This includes indirect skips for which Election 2 (explained below) is being made currently or was made previously.

Column (n): Section 2632(c) Elections

Section 2632(c) automatically allocates unused GST exemption to indirect skips. You can make three elections regarding this:

Election 1: Opt out of automatic allocation for the current transfer to a specific trust.
Election 2: Opt out of automatic allocation for the current and all future transfers to a specific trust.
Election 3: Elect to treat any trust as a GST trust for automatic allocation rules.

Election Timing: Election 1 must be on a timely filed gift tax return for the transfer year. Elections 2 and 3 can be on a timely return for the year they become effective.

To make an election, check column (n) next to the transfer and attach an explanation. For Elections 2 or 3 on a return not reporting the transfer, just attach the statement. If reporting a transfer to a trust with Election 2 or 3 made on a prior return, do not mark column (n) or attach a statement.

Attachment: Attach a statement describing the election and identifying the trusts/transfers it applies to.

Split Gifts – Gifts Made by Spouse (Part 3)

See instructions under Part 1.

Part 4: Taxable Gift Reconciliation – Summarizing Taxable Amounts

This section reconciles your total gifts to arrive at taxable gifts.

Line 1: Total Gifts from Schedule A

Enter only the donor’s gifts. If gift splitting, enter only the filing spouse’s half of split gifts.

Line 2: Total Annual Exclusions

Enter the total annual exclusions claimed for Schedule A gifts (up to $18,000 per donee, or less if splitting gifts).

Deductions: Lines 4 – 7

Line 4: Marital Deduction

Enter total gifts to your spouse from Schedule A (Parts 1 and 3) for which you claim a marital deduction (box in column (l) checked). Do not include gifts not listed on Schedule A. Do not include gifts to non-U.S. citizen spouses on line 4. You can deduct nonterminable interest gifts fully, and certain terminable interests as described below.

Terminable Interests: Generally, marital deduction is not allowed for terminable interests unless certain exceptions are met. A terminable interest is typically nondeductible if someone other than the spouse will have an interest after the spouse’s interest ends (e.g., life estate, term for years). Joint tenancies or tenancies by the entirety with your spouse are not terminable interests solely due to potential severance.

Life Estate with Power of Appointment: A terminable interest gift may be deductible if all four conditions are met:

Spouse is entitled to all income for life from the entire interest.
Income is paid at least yearly.
Spouse has unlimited power to appoint the entire interest (during life or by will).
No part of the interest is subject to another person’s appointment power (except to appoint to the spouse).

If these conditions only apply to a portion of the property interest, the marital deduction is limited to that portion. A partial interest is a specific portion only if the spouse’s income and appointment rights are a fractional or percentile share reflecting property value changes. If the spouse receives a fixed annual income sum, the capital amount needed to produce that sum is the deductible portion.

QTIP Election (Qualified Terminable Interest Property): You can elect to deduct a terminable interest gift meeting conditions 1, 2, and 4 above (income for life, paid yearly, no other appointee), even if condition 3 (unlimited appointment power) is not met. Make this election by listing the QTIP on Schedule A and deducting its value on Schedule A, Part 4, line 4. The election is presumed for all listed and deducted qualified property. QTIP election cannot be made on a late-filed Form 709.

Line 5: Annual Exclusions for Marital Deduction

Enter the annual exclusions claimed for gifts listed on line 4 (marital deduction gifts).

Line 7: Charitable Deduction

Deduct gifts to qualified charitable organizations or government entities for public purposes. On line 7, enter total charitable gifts (minus annual exclusions allowed), which is the total value of items on Schedule A Parts 1 and 3 with the box in column (k) checked.

Line 10: GST Tax

If GST tax is due on direct skips reported, this tax amount is also considered a gift. If you entered gifts in Part 2 or are splitting gifts where your spouse made GST taxable gifts you’re reporting, complete Schedule D and enter the total from Schedule D, Part 3, column (g) on line 10. Otherwise, enter zero.

Line 12: Election Out of QTIP Treatment for Annuities

Section 2523(f)(6) creates automatic QTIP election for joint and survivor annuities where spouses are the only potential recipients before the last spouse’s death. You can elect out of QTIP treatment by checking the box on line 12 and listing the Schedule A item number for the annuities you’re electing out of. Annuities on line 12 cannot also be on line 4. Annuities not on line 12 must be on line 4. The election is irrevocable and can be made for some, not necessarily all, joint and survivor annuities.

IV. Schedule B: Gifts From Prior Periods – Calculating Cumulative Tax

Schedule B is used to calculate cumulative taxable gifts from previous filing periods, impacting your current gift tax calculation.

If you haven’t filed gift tax returns for prior periods, check “No” on Form 709, Part I, line 18a. If you have filed before, check “Yes” and complete Schedule B. List years or quarters chronologically.

Complete Schedule A before starting Schedule B.

Column (a): Period of Gift

For gifts before 1971 or after 1981, show calendar years. For gifts between 1971 and 1982, show calendar quarters.

Column (b): IRS Office Where Filed

Identify the IRS office where prior returns were filed. If your name has changed, list any previous names used. Explain any name variations (e.g., initials vs. full names).

Column (c): Applicable Credit Used

To find the applicable credit (formerly unified credit) used for gifts after 1976, use the “Worksheet for Schedule B, Column (c)” unless prior gifts total $500,000 or less.

Prior Gifts ≤ $500,000: Enter the actual applicable credit applied in the prior period.

Prior Gifts > $500,000: See “Redetermining the Applicable Credit” section below.

Column (d): Specific Exemption Claimed

Enter the specific exemption claimed for gifts in periods ending before January 1, 1977.

Column (e): Taxable Gifts for Prior Periods

Show the correct (finally determined) amount of taxable gifts for each prior period. This should reflect all taxable gifts, even if no tax was paid due to the applicable credit.

Redetermining the Applicable Credit

For prior gifts exceeding $500,000, use the “Worksheet for Schedule B, Column (c)” to recalculate the applicable credit.

Worksheet for Schedule B, Column (c) (Credit Allowable for Prior Periods)

This worksheet systematically recalculates credit allowable for each prior period with taxable gifts, starting from the earliest year after 1976. It involves calculating cumulative taxable gifts and taxes, accounting for DSUE and restored exclusion amounts, and determining available and allowable credit in each period.

[Worksheet Table Image as in Original Document]

Table of Basic Exclusion and Credit Amounts (Recalculated for 2024 Rates)

This table provides exclusion and credit amounts for various periods from 1977 to 2024, crucial for completing Schedule B and the worksheet.

[Table of Basic Exclusion and Credit Amounts as in Original Document]

V. Schedule C: Portability of Deceased Spousal Unused Exclusion (DSUE) Amount and Restored Exclusion Amount

Schedule C is for donors utilizing Deceased Spousal Unused Exclusion (DSUE) from predeceased spouses or Restored Exclusion Amount related to same-sex marriage transfers before the Windsor decision.

Section 303 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 allows estates of decedents dying after 2010 to elect to transfer unused exclusion to the surviving spouse (DSUE). This DSUE amount can be used by the surviving spouse against gift and estate tax liabilities.

Complete Schedule A before starting Schedule C.

Note: Nonresident, non-citizen surviving spouses may not use DSUE except as treaty-allowed.

Last Deceased Spouse Limitation

The “last deceased spouse” is the most recently deceased person married to the surviving spouse at death. This designation is fixed at the time of a taxable gift and unaffected by portability election status or whether the last deceased spouse had DSUE. Remarriage doesn’t change the last deceased spouse designation or prevent DSUE use.

DSUE from the last deceased spouse is applied before the surviving spouse’s own basic exclusion amount. DSUE from multiple predeceased spouses can be used sequentially, but not simultaneously, and DSUE from a predeceased spouse cannot be used after a subsequent spouse’s death.

The IRS may examine returns of predeceased spouses who elected portability to verify DSUE amounts. DSUE can be adjusted or eliminated, but tax assessments on predeceased spouses are limited by the statute of limitations.

Restored Exclusion Amount (Windsor Decision)

Before the Windsor decision (2013), DOMA prevented federal recognition of same-sex marriages, disallowing marital deductions for same-sex couples. These taxpayers had to use their applicable exclusion or pay gift/estate taxes on transfers to same-sex spouses. Windsor overturned DOMA, granting federal recognition to same-sex marriages.

A procedure now exists to restore applicable exclusion used for taxable gifts to same-sex spouses before Windsor. This applies only to transfers that didn’t qualify for marital deduction solely due to DOMA. If the limitations period has expired, exclusion can be recalculated but not the transferred interest value or legal issues (except marriage existence). No refunds are possible if the refund claim limitations period is expired.

The first step is to determine the applicable exclusion used for taxable gifts to a same-sex spouse. In any year, this is calculated as:

*(Applicable exclusion used on all taxable gifts) (Taxable gifts to same-sex spouse / Total taxable gifts)**

Example Calculation: In 2011, A made $5 million taxable gifts: $3 million to same-sex spouse B, $2 million to C. A’s state recognized same-sex marriage, but the federal government didn’t due to DOMA. The gift to B would have qualified for marital deduction if federally recognized. A had $4 million applicable exclusion available in 2011 (after using $1 million previously). Since available exclusion ($4M) was less than total taxable gifts ($5M), A used all $4M exclusion in 2011.

Restored Exclusion Amount Calculation Example:

[Restored Exclusion Amount Calculation Table as in Original Document]

In 2011, A used $2,400,000 exclusion for the gift to B. Repeat this for every year with taxable gifts to a same-sex spouse. Summing these amounts gives the total Restored Exclusion Amount, usable for future gifts and bequests. Enter this on Schedule C, line 3. Attach a calculation statement to the first Form 709 claiming Restored Exclusion Amount.

The Restored Exclusion Amount must be accounted for on every subsequent Form 709 (and Form 706). It’s entered on Schedule C and on Form 706, Part 2, line 9c. The “Worksheet for Schedule B, Column (c)” should also reflect the Restored Exclusion Amount by adding it to the DSUE amount in column H for the year of restoration and all subsequent years.

Completing Schedule C

Complete Schedule C if you are a surviving spouse with DSUE or a taxpayer with Restored Exclusion Amount, or both. Schedule C requires information on DSUE from the last deceased spouse and previously deceased spouses. Each line in the chart should represent a different predeceased spouse. Attach proof of each portability election reported.

Part 1. DSUE Received From the Last Deceased Spouse

Include information about DSUE from your most recent deceased spouse (death after December 31, 2010). In column (e), enter the total DSUE amount from column (d) applied to prior gifts and gifts on this return. DSUE can only be applied to gifts made after it arose.

Part 2. DSUE Received From Other Predeceased Spouse(s)

Enter information on DSUE from spouses who died before the last deceased spouse (but after January 1, 2011) if their estate elected portability. Column (d) shows DSUE from each prior spouse. Column (e) shows the portion of column (d) DSUE used for prior gifts. DSUE can only be used for gifts made after it arose.

Remaining DSUE from a predeceased spouse (not the last deceased spouse) cannot be used against tax from lifetime gifts, even if the last deceased spouse had no DSUE or no portability election, or if their DSUE is fully used.

Determining Applicable Credit Amount Including DSUE and Restored Exclusion Amount

On line 1, enter the 2024 basic exclusion amount ($13,610,000). Add column (e) totals from Parts 1 and 2 and enter on line 2. Enter Restored Exclusion Amount on line 3. Line 4 is the total of lines 1, 2, and 3. Using the “Table for Computing Gift Tax,” find the applicable credit for the line 4 amount. Enter this credit on line 5 and Form 709, Part II, line 7.

VI. Schedule D: Computation of GST Tax – Calculating Generation-Skipping Transfer Tax

Schedule D calculates the Generation-Skipping Transfer (GST) tax, which applies to direct skips reported in Part 2 of Schedule A.

Part 1: Generation-Skipping Transfers

List all gifts from Schedule A, Part 2 in Part 1 of Schedule D, in the same order and values. If reporting GST for ETIP transfers, see “How to report GSTs after the close of an ETIP” section below.

Column (a): Item Number from Schedule A

List item numbers from Schedule A, Part 2, column (a). Then list items for Schedule D (including ETIP transfers).

Column (b): Description of Gift

Provide descriptions only for ETIP transfers; leave blank otherwise.

Column (d): Annual Exclusion Allocated

You can claim the gift tax annual exclusion for reported direct skips (except certain trust direct skips), following the same annual exclusion rules. Allocate the exclusion gift-by-gift, up to $18,000 per donee, chronologically starting with the earliest qualifying gift. Do not claim more than $18,000 total exclusion per donee.

Note: Annual exclusion is not allowed for trust transfers unless the trust meets specific requirements discussed under “Part 2—Direct Skips” earlier.

How to Report GSTs After ETIP Closure

For GSTs due to ETIP closure, complete Part 1 as follows:

Column (b): Description. For ETIP transfers only, describe as in Schedule A, Part 1 instructions. Also, describe the interest closing the ETIP, the termination cause, ETIP closure date, and the year and Schedule A item number of the original gift portion reporting.

Column (c): Value.

For timely filed returns, use value at ETIP closure.
For late-filed returns, use value on filing date.

Part 2: GST Exemption Reconciliation

Line 1: Maximum GST Exemption

Every donor has a lifetime GST exemption. For 2024, it’s $13,610,000. For transfers through 1998, it was $1 million. Annual increases generally apply only to transfers (or appreciation) in or after the increase year.

Example: A donor made $1,750,000 direct skip GSTs through 2005, allocating all $1,500,000 exemption. In 2024, a $2,000,000 taxable GST is made. The donor can allocate $2,000,000 of the 2024 exemption to the 2024 transfer but cannot apply the unused $10,110,000 of the 2024 exemption to pre-2024 transfers. However, for a 2005 transfer of $1,750,000 to a non-direct skip trust from which future GSTs could occur, the donor could allocate the increased exemption to the trust, even without additional transfers.

Keep records of transfers and exemption allocations for correct future allocation. Enter your maximum GST exemption on line 1. This may not be the highest indexed amount if no GSTs were made in the increase year. The exemption can be applied to lifetime transfers (Form 709) or transfers at death (Form 706). Allocation is irrevocable. For inter vivos direct skips, unused exemption is automatically allocated unless you elect out by filing Form 709 with a statement describing the transaction and the extent of non-allocation. Timely filing and paying GST tax prevents automatic allocation.

Special QTIP Election: If you elect QTIP treatment on Schedule A trust gifts, you can also elect on Schedule D to treat the entire trust as non-QTIP for GST tax. This election must be for the entire trust containing the gift. Identify the specific gift item number for this special QTIP election.

Line 5: Exemption for Indirect Skips

Enter the GST exemption amount you are applying to transfers reported in Schedule A, Part 3 (indirect skips). Section 2632(c) automatically allocates unused exemption to indirect skips to achieve a zero inclusion ratio. You can elect out of this automatic allocation as detailed in Part 3 instructions.

Line 6: Notice of Allocation – For Transfers Not on This Return

You can allocate GST exemption to transfers not on this return, such as late allocations. To do so, attach a “Notice of Allocation” to Form 709. It must include:

Clear trust identification (EIN if known).
If late allocation, the year transfer was reported on Form 709.
Trust asset value at allocation effective date.
GST exemption amount allocated to each gift (or formula allocation statement for zero inclusion ratio).
Trust inclusion ratio after allocation.

Total these allocations and enter on line 6.

Note: For ETIP property, GST exemption allocation at transfer is effective only at ETIP end.

Part 3: Tax Computation

Enter every gift from Schedule D, Part 1 in Part 3.

Column (c): GST Exemption Allocated

You can allocate any, some, or none of your available exemption to gifts in Part 3. The total exemption claimed in column (c) cannot exceed the amount on Schedule D, Part 2, line 3.

Column (d): Inclusion Ratio

Carry computation to three decimal places (e.g., “1.000”).

VII. Part II: Tax Computation (Page 1 of Form 709) – Calculating Your Gift Tax

Part II of Form 709 summarizes the taxable gifts and computes the gift tax liability.

Table for Computing Gift Tax

This table provides the tax rates and calculations needed to compute gift tax based on taxable amounts.

[Table for Computing Gift Tax as in Original Document]

Lines 4 and 5: Tax Calculation

Use the “Table for Computing Gift Tax” to calculate tax for the amount on line 3 (to line 4) and line 2 (to line 5).

Line 7: Applicable Credit

The applicable credit (formerly unified credit) is the tentative tax on the applicable exclusion amount. For 2024, the applicable exclusion amount is:

Basic exclusion amount ($13,610,000), PLUS
DSUE amount, PLUS
Restored Exclusion Amount.

U.S. citizens or residents must apply any available applicable credit against gift tax. If ineligible for DSUE or Restored Exclusion Amount, enter $5,389,800 on line 7. Nonresident, non-citizens enter zero. If eligible for DSUE or Restored Exclusion Amount (or both), complete Schedule C and enter the amount from Schedule C, line 5 on line 7. Determine the tentative tax on the applicable exclusion amount using the “Table for Computing Gift Tax” rates and enter on line 7.

Line 10: 20% Specific Exemption for 1976 Gifts

Enter 20% of the specific exemption allowed for gifts made September 9, 1976 – January 1, 1977 (from Schedule B, column (d) for 1976 Q3 and Q4 gifts).

Line 13: Credit for Foreign Gift Tax

Gift tax conventions exist with several countries. If claiming foreign gift tax credit, calculate it and attach the calculation and proof of foreign tax payment. See the relevant convention for details.

Line 19: Payment

Make checks or money orders payable to “United States Treasury” with the donor’s SSN written on them. Overpayments on Form 1040/1040-SR cannot offset Form 709 taxes.

No checks of $100 million or more accepted. For payments of $100 million or more, use multiple checks under $100 million each or use electronic payment methods.

Signature

The donor must sign the return. Preparers (unless full-time employees) must also sign. If splitting gifts, the spouse must also sign and date a Notice of Consent (attached to the return).

Third-Party Designee: You can authorize your return preparer to discuss your 2024 Form 709 with the IRS by checking “Yes” next to your signature. This authorization allows the preparer to provide missing information, get processing status, receive notices, and respond to certain IRS notices but not to receive refunds or represent you broadly. Authorization ends after 3 years or can be revoked earlier (see Pub. 947).

This guide provides a detailed walkthrough of the gift tax form. However, tax law is complex, and this information is not a substitute for professional tax advice. Consult with a qualified tax advisor for personalized guidance related to your specific situation.