If you are a US citizen or green card holder and you give large gifts to family, friends, or others, you may be required to file Form 709. This form is used to report gifts that exceed the annual exclusion limit, and it also covers generation skipping transfers. In this article, we explain what Form 709 is, when you need to file it, how much you can give without triggering the need to file, whether you owe any gift tax, how it’s calculated, and how our team of expert expat tax preparers can help you stay compliant.
What Is Form 709?
Form 709, officially titled the “United States Gift (and Generation-Skipping Transfer) Tax Return,” is a tax form used to report:
- Gifts of property or cash exceeding the annual gift tax exclusion.
- Transfers subject to the generation skipping transfer tax.
This form helps the IRS track taxable gifts and apply the lifetime exemption limits. It also allows for taxable gift reconciliation across prior periods and ensures compliance with generation skipping transfer rules.
When and Where to File
You must file Form 709 by April 15th of the year following the tax year of the gift. This aligns with your general tax return due date.
If you’re living abroad, you may qualify for an automatic two-month extension. You can also request a longer extension using Form 4868, but this does not extend the date to pay any taxes due.
How Much Money Can I Give Tax Free?
For the 2025 tax year, you can give up to $19,000 per recipient without needing to file Form 709. This is called the annual gift tax exclusion. For married couples, this exclusion doubles to $38,000 if both spouses agree to split the gift. ( Each spouse can give $19,000 separately to the same recipient, allowing for a combined total of $38,000, but each spouse must file their own Form 709 to elect gift splitting.)
Gifts below this annual exclusion amount do not require reporting. You do not pay any gift tax or use up your lifetime exemption.
You will only owe gift tax if your taxable gifts exceed the lifetime gift tax exemption, which is $13.99 million per individual in 2025. Even if your gifts exceed the annual exclusion, you typically won’t pay tax unless your total taxable gifts over your lifetime surpass this threshold.
Who Needs to File Form 709?
You need to file Form 709 if, in any tax year, you:
- Gave gifts exceeding the annual exclusion amount ($19,000 in 2025).
- Gave property transferred to a person more than once in a year that cumulatively exceeded the exclusion.
- Made gifts of property where the recipient is two or more generations younger than you (a generation skipping transfer).
- Shared gifts with your spouse but are not reporting jointly.
- Used deceased spousal unused exclusion.
- Made gifts involving certain trusts or charities.
Note: Each taxpayer must file their own Form 709, even if married. There is no joint filing.
Understanding Key Terms and Limits
Annual Gift Tax Exclusion
For 2025, the annual exclusion is $19,000 per person, or $38,000 for married couples if both agree to split gifts. This is also known as the gift tax annual exclusion.
Lifetime Gift Tax Exemption
In 2025, the gift lifetime exemption is $13.99 million per individual. Taxable gifts over the annual exclusion amount reduce this exemption.
Generation Skipping Transfer Tax
This tax applies to transfers to recipients who are two or more generations younger, such as grandchildren. If you’re funding a trust or making large gifts to a young relative, this generation skipping transfer tax may apply.
How Is Gift Tax Calculated?
If you give more than the annual exclusion, the excess is considered a taxable gift. The IRS tracks these taxable gifts over your lifetime. If the total exceeds the lifetime exemption of $13.99 million, then gift tax may apply.
Gift tax rates are progressive, ranging up to 40%, but most people do not pay any gift tax because their total gifts stay below the lifetime exemption. Instead, the amount over the annual exclusion simply reduces your remaining unified credit (the lifetime exemption).
Filing Example: Married Expat Gifting Real Estate
John and Mary, both US citizens living in France, jointly gifted a $100,000 villa in Italy to their daughter in 2025. They agreed to split the gift. After using their $38,000 combined annual exclusion, they each have $31,000 of taxable gifts to report. Both must file Form 709, report the gift, and apply the unified credit to offset the taxes owed.
Here’s how the gift tax treatment works:
- Gift Amount: $100,000
- Annual Exclusion (2025): $19,000 per donor per recipient
- Gift Splitting: They elect to split the gift, so each spouse is treated as having given $50,000.
- Exclusion Applied: Each spouse subtracts $19,000 from their $50,000 portion = $31,000 taxable gift per spouse.
Tax Owed?
- No gift tax is immediately owed if John and Mary have not exceeded their lifetime gift tax exemption of $13.99 million each (in 2025).
- Instead of paying tax, each uses $31,000 of their lifetime exemption.
- They still must file Form 709 individually to report the gift and the election to split it.
Summary:
- Taxable gift per spouse: $31,000
- Tax owed: $0 (assuming neither has used up their lifetime exemption)
- Form 709: Required for both to file, individually
What Gifts Are Reportable?
You must report:
- Transfers subject to the gift tax exceeding the annual exclusion.
- Gifts of property with no fair price or for less than value.
- Direct payments to individuals, unless they qualify under exclusions like tuition or medical services.
You do NOT need to report:
- Gifts to charities.
- Payments for someone’s medical bills or tuition, paid directly to the provider.
- Gifts under the annual exclusion threshold.
How to Fill Out Form 709
Key Sections
- Schedule A: Transfers subject to gift tax.
- Schedule B: Gifts split with a spouse.
- Schedule C: Calculating taxable gift reconciliation.
- Schedule D: Generation skipping transfer information.
Ensure to include:
- Donor details.
- Donee information.
- Date of gift.
- Type and value of property transferred.
- Whether gift qualifies for the annual exclusion.
- Any services or money involved.
Page by page, it’s critical to complete each schedule accurately. Incorrect entries can trigger penalties or audits.
Common Mistakes to Avoid
- Failing to report generation skipping transfer elections.
- Missing the filing date.
- Misunderstanding united states gift exemption vs. annual exclusion.
- Incorrect cost basis when reporting gifts of appreciated assets.
These errors can delay processing or trigger IRS scrutiny.
Let 1040 Abroad Help You File Form 709
At 1040 Abroad, we’ve helped thousands of expats file their Form 709 properly. Our experienced tax preparers know how to fill, complete, and submit each schedule—from Schedule B to the generation skipping transfer tax sections.
Need help? Contact us today for a free, no-obligation tax assessment. We’ll review your gifts, evaluate your taxable exposure, and provide clear, expert guidance. Your finances, estate, and peace of mind are in good hands.
