Is a gift made by one check to spouses considered one gift or two for tax purposes?
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For federal gift tax purposes, when a donor makes a gift by a single check payable to two spouses (for example, "John and Mary Smith"), the key question is whether the gift is considered as made to one donee (the couple as a unit) or to two separate donees (each spouse individually). This distinction is important because the annual gift tax exclusion (for 2024, $18,000 per donee) applies per recipient.
The IRS and courts have consistently held that a gift made by a single check to spouses is generally treated as a gift to each spouse in equal shares, unless there is clear evidence of a different intent or arrangement. This means the gift is considered as made half to one spouse and half to the other, so the donor can apply the annual exclusion to each spouse separately.
1. Legal Reasoning and Sources
- According to IRS guidance and the Instructions for Form 709, the annual exclusion applies to each donee. If a gift is made to more than one donee as joint tenants, the annual exclusion applies to each donee for their share of the gift, unless the facts show a different allocation was intended or required by law.
- The Instructions for Form 709 state: "The gift of a present interest to more than one donee as joint tenants qualifies for the annual exclusion for each donee." This means that if a check is made out to "John and Mary Smith," each is treated as a separate donee for gift tax purposes, and the donor may exclude up to $18,000 for each spouse in 2024.
- This treatment is consistent with the general rule that, unless the donor specifies otherwise, a gift to joint tenants is presumed to be made equally to each joint tenant.
2. Practical Example
- If you write a $36,000 check to "John and Mary Smith," and it is a gift of a present interest, it is treated as a $18,000 gift to John and a $18,000 gift to Mary. Both gifts are within the annual exclusion for 2024, so no gift tax return is required (assuming no other gifts to either spouse that year).
Caveats:
- If the gift is of a future interest, the annual exclusion does not apply, and the entire amount may be subject to gift tax reporting.
- If the facts show that only one spouse is intended to benefit from the gift, or if the property law of the state dictates a different result, the allocation may differ.
3. Conclusion
A gift made by one check to spouses is generally considered two gifts—one to each spouse—for gift tax purposes, and the annual exclusion applies separately to each spouse.
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