Form 709 — United States Gift (and Generation-Skipping Transfer) Tax Return

Who Must File Form 709?

Form 709 must be filed by any U.S. citizen or resident who: (1) makes taxable gifts exceeding the annual exclusion ($19,000 per donee in 2026) to any one person during the year; (2) makes gifts of future interests (regardless of amount); (3) elects gift splitting with their spouse; or (4) makes any generation-skipping transfer (direct skip) that is not fully covered by the GST annual exclusion. Form 709 is filed annually (calendar year basis) and is due by April 15 of the year following the year of the gift (with an automatic 6-month extension available by filing Form 4868).

Annual Exclusion and Taxable Gifts

The annual exclusion allows each donor to give up to $19,000 per donee per year (2026, indexed for inflation) without using any of their lifetime exemption or paying gift tax. The annual exclusion is available for gifts of present interests (gifts that the donee can use immediately). Gifts of future interests (gifts that the donee cannot use until a future date) do not qualify for the annual exclusion and must be reported on Form 709.

Gift Splitting

Gift splitting allows married couples to treat a gift made by one spouse as if it were made 50/50 by both spouses. This effectively doubles the annual exclusion for married couples: a married couple can give up to $38,000 per donee per year (2 x $19,000) without using any lifetime exemption. Gift splitting requires both spouses to consent on Form 709. If gift splitting is elected, both spouses must file Form 709 for the year, even if only one spouse made gifts.

Gift splitting is particularly useful for married couples who want to make large gifts to children or grandchildren. For example, a married couple can give $38,000 per child per year without using any lifetime exemption. Over 10 years, this amounts to $380,000 per child in tax-free gifts.

Lifetime Exemption and Taxable Gifts

Taxable gifts (gifts in excess of the annual exclusion) reduce the donor's lifetime exemption ($13.99 million in 2026). Once the lifetime exemption is exhausted, gift tax is imposed at a 40% rate on taxable gifts. The lifetime exemption is unified with the estate tax exemption: any lifetime exemption used for gifts reduces the amount available for the estate tax exemption at death.

The current high exemption amounts are scheduled to sunset after 2025 under the TCJA, reverting to approximately $7 million per person (indexed for inflation). Practitioners should advise high-net-worth clients to make large gifts before the sunset to lock in the higher exemption amount. The IRS has confirmed that gifts made before the sunset will not be subject to clawback.

GST Tax Allocation on Form 709

Form 709 is also used to allocate the GST exemption to gifts made to skip persons (grandchildren and more remote descendants, or non-family members more than 37.5 years younger than the donor). The GST exemption must be allocated on Form 709 in the year of the gift to be effective. If the GST exemption is not allocated on a timely filed Form 709, the IRS will automatically allocate the GST exemption to direct skips (but not to indirect skips through trusts).

Practitioners should advise clients who make gifts to trusts for the benefit of grandchildren to carefully allocate the GST exemption on Form 709 to ensure that the trust is exempt from GST tax. A trust with an inclusion ratio of zero (fully exempt from GST tax) can distribute assets to grandchildren and more remote descendants without GST tax.

Frequently Asked Questions