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Level 5
April 7, 2025

gift tax return?

  • April 7, 2025
  • 2 replies
  • 9 views

Two parents gave their son and fiancé 100,000 to buy a house.  The kids are going to pay it back but no formal loan and no interest will be paid.  I see it as each parent gave each child $25000 and therefore each parent paid $7000 above the annual exclusion to each child.  It appears I need to file Form 709 and put the 14,000 on each parent's return.  I haven't had to file one of these and just want to make sure I'm thinking correctly.  

 

Thank you

    2 replies

    BobKamman
    Level 15
    April 7, 2025

    It's not how you see it, it's how your clients see it.  If they say it's a loan, explain to them that it might be better to have some documentation to back that up.  Gift tax returns are like alien tax clearances these days.  Everyone should know about them but not many people comply with the requirements.  

    ColmattAuthor
    Level 5
    April 7, 2025

    Thanks.  I did explain the loan and they don't want to make it formal. It is however a loan.  I would be tempted to just explain it to them and not file 709.  It is however easy enough to file that so just do it?

     

     

    sjrcpa
    Level 15
    April 7, 2025

    A gift is not a loan.

    A loan is not a gift.

    Have them file a gift tax return when they forgive the loan.

    The more I know the more I don’t know.
    George4Tacks
    Level 15
    April 7, 2025

    From our fearless leader Turbo Tax https://turbotax.intuit.com/tax-tips/tax-payments/irs-tax-rules-for-imputed-interest/L7UbulHpC

    From the Powers that be https://www.irs.gov/businesses/small-businesses-self-employed/section-7520-nterest-rates

    Be sure to review  your billing rate for new clients that come in with an unorganized grocery bag, or similarly things done without advance tax advise. 

     

    Answers are easy. Questions are hard!