What are the filing requirements to file a Gift Tax Return?
Annual Limit for Tax Free-Gifts
A taxpayer is required to file a gift tax form whenever the annual $12,000 tax-free gift limit is exceeded. Generally speaking, the IRS allows a taxpayer to gift away money or assets upto to a value of $12,000 to a single donee (gift recipient) per year.
If you are married, you and your spouse can jointly give away up to $24,000 per donee. Thus, if you have 2 kids, you and your spouse may gift away $48,000 annually to your kids. As such for this situation, there no any gift taxes to pay, and your estate tax exemption remains intact.
What happens when the Gifts exceed that limit the IRS?
You may have to file a federal gift tax return, using IRS Form 709. It's generally required that a form 709 to be filed if you made a gift worth over $12,000 to an individual or several gifts to one individual that add up to more than $12,000.
Gifts above the $12,000 annual limit are called "taxable gifts." However, there is no federal gift tax unless your cumulative taxable gifts exceed your $1 million gift tax exemption.
But you must still file Form 709 if you made any taxable gifts, even though there is no tax due.
Thus, a Gift tax return is filed whenever a Taxpayer has made taxable gifts in excess of the annual $12,000 tax-free gift limit that is currently in effect for 2007 and 2008.