Can Form 3520 Gains 2023-2024

I want to talk to you. This is one of the most misunderstood topics when I see clients come into my office. It concerns the amount that you are allowed to gift under the federal regulations before filing a gift tax return. I first want to say that I only practice in the state of California, so I know nothing about what other states have in their rules and regulations regarding annual gifts. But in California and on a federal level, this is what I always hear from people who come into my office: "Well, I wanted to give more than $14,000, but because they can only gift $14,000 before paying attached, I just gave my daughter $14,000." Or, "I would really like to give more, but I don't want to pay tax on the gift." The thing that everyone needs to know is that's not how it works at all. The way the Federal gift tax works is, if you give more than $14,000 per year to any one individual, then you have to file a return. You have to file what's called a Form 709 and say, "Oh yeah, Uncle Sam, yeah, I need more than $14,000, and this was how much it was." Then the IRS has a little ledger. Stephanie West, okay, she gave more than $14,000 in 2017. She gave $20,000, so they put $6,000 because that's $6,000 over the $14,000 I'm allowed to give. And then every year that I give gifts of more than $14,000, I report it, and they keep it on a log. And then at my death, it's in aggregate. The total amount of gifts at this point exceeds about $5.45 million dollars. Then there's a tax on the gift. There's no tax on a $20,000 gift, there's no gift tax...