Estate Planning Pitfall: You’re unsure whether you need to file a 2012 gift tax return


If you transferred anything of value to another person during 2012, consider whether you need to file a gift tax return. Some transfers require a return even if you don’t owe tax. And, in some cases, it’s desirable to file a return even if it’s not required.

Generally, you’ll need to file a gift tax return for 2012 if, during the tax year, you:

  • Made gifts that exceeded the $13,000-per-recipient gift tax annual exclusion (other than gifts to your spouse that qualify for the marital deduction),
  • Made gifts that exceeded the $139,000 annual exclusion for gifts to a noncitizen spouse,
  • Made gifts of future interests — such as remainder interests in a trust — regardless of amount,
  • Contributed to a Section 529 college savings plan for your child, grandchild or other loved one and wish to accelerate up to five years’ worth of annual exclusions ($65,000) into 2012,
  • Made gifts that you wish to split with your spouse to take advantage of your combined $26,000 annual exclusions, or
  • Made gifts of jointly held or community property.

No return is required if your gifts for the year consist solely of annual exclusion gifts, present interest gifts to a U.S. citizen spouse, qualifying educational or medical expenses paid directly to a school or health care provider, and political or charitable contributions.

If you transfer hard-to-value property, consider filing a gift tax return even if the transfer isn’t taxable. Adequate disclosure of the transfer in a return triggers the statute of limitations, preventing the IRS from challenging your valuation more than three years after you file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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