Are gifts of $20,000 from each spouse to their son considered separately for Form 709 filing purposes?
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Gifts of $20,000 from each spouse to their son are not considered separately for Form 709 filing purposes if the spouses elect to split gifts under the gift-splitting rules of IRC §2513. Here’s a detailed explanation based on the relevant legal authorities and IRS guidance:
1. Gift Splitting Under IRC §2513
- General Rule: If one spouse makes a gift to a third party (such as their son), both spouses may elect to treat the gift as made one-half by each, provided both are U.S. citizens or residents at the time of the gift and both consent to the election.
- Consent Requirement: Both spouses must signify their consent to split all gifts made to third parties during the calendar year. This is typically done by completing the appropriate section on Form 709 and attaching a signed Notice of Consent from the non-donor spouse.
- Effect of Gift Splitting: When gift splitting is elected, all gifts made by either spouse to third parties during the year are treated as made one-half by each spouse.
2. Application to the Example
- Scenario: Each spouse gives $20,000 to their son in the same calendar year.
- Without Gift Splitting: If each spouse’s gift is considered separately, each has made a $20,000 gift to the son. The annual exclusion for 2025 is $19,000 per donee. Each spouse would have made a taxable gift of $1,000 ($20,000 - $19,000) and would be required to file Form 709 to report the excess over the annual exclusion.
- With Gift Splitting: If the spouses elect to split gifts, each $20,000 gift is treated as $10,000 from each spouse. Thus, the son is considered to have received $10,000 from each parent, for a total of $20,000, but for gift tax purposes, each parent is treated as having given $10,000 to the son. Since $10,000 is less than the $19,000 annual exclusion, neither spouse has made a taxable gift, and no Form 709 is required solely because of these gifts.
3. Filing Requirements
- If No Gift Splitting: Each spouse must file Form 709 because each made a gift exceeding the annual exclusion.
- If Gift Splitting Is Elected: If both spouses elect to split gifts and neither made other gifts to the son or to other donees that would require a return, and all gifts are of present interests, then no Form 709 is required because each spouse’s share of the gift does not exceed the annual exclusion.
- If Either Spouse Made Other Gifts: If either spouse made other gifts to the son or to other donees that, when split, would cause the total to any one donee to exceed the annual exclusion, then a Form 709 would be required.
4. Summary Table (for clarity):
*Assumes no other gifts to the son or other donees that would require a return.
5. Conclusion
Gifts of $20,000 from each spouse to their son are not considered separately for Form 709 filing purposes if the spouses elect to split gifts. With gift splitting, each spouse is treated as having made a $10,000 gift, which is below the $19,000 annual exclusion for 2025, and no Form 709 is required unless other gifts trigger a filing requirement. If gift splitting is not elected, each spouse must file Form 709 because each made a gift exceeding the annual exclusion.
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