What to know about filing gift tax forms

Each year, Maryland residents and others are free to gift up to $15,000 per person to as many people as they would like. If an individual makes gifts in excess of $15,000, he or she is generally required to file Form 709. This is true even if a person owes no tax on the excess amount gifted because of his or her lifetime gift exemption.

The reason for the reporting mandate is so that the IRS can subtract that amount from the remaining exemption balance. In some cases, an individual may need to report gifts that come with restrictions or that were made to trusts. The IRS may be able to search through a person's financial records to determine if a required filing was not made. In the event that a person is caught after he or she passes, a penalty may be levied on that person's estate.

It is important to note that penalties and interest accrue from the date that the gift tax should have been filed. This is generally true whether an audit occurs during a person's lifetime or after he or she has passed. Individuals may consult with an estate planner or consult with the IRS directly if they have any questions about gift tax reporting requirements.

Those who have questions about filing taxes may benefit from consulting with an attorney. Doing so might make it possible to get timely advice about how to handle gift tax or other issues before the IRS sends a notice. An attorney may also provide information as it relates to how to handle an audit if one is received. This might make it easier to resolve a tax issue quickly.

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