When Filing a Gift Tax Return is Required (or Recommended)

Thanks to the annual gift tax exclusion, you can systematically reduce your taxable estate with minimal effort. While a gift tax return isn’t always required, there are certain situations where filing one is mandatory—or simply a smart move.

When Is a Gift Tax Return Required?

For 2024, the annual gift tax exclusion amount is $18,000 per recipient. (This increases to $19,000 per recipient in 2025.)

Here’s an example: If you have three children and seven grandchildren, you can gift up to $180,000 in 2024 ($18,000 x 10) without triggering any gift tax liability. In this case, you’re not required to file a gift tax return.

However, there are scenarios where filing is necessary:

• Gifts exceeding the annual exclusion limit: If you gift more than $18,000 to any individual in 2024, you’ll need to file a gift tax return. While the excess amount can be sheltered by the federal gift and estate tax exemption (currently $13.61 million for 2024, increasing to $13.99 million in 2025), the return is still required to track exemption use.
• Split gifts with your spouse: If you and your spouse decide to “split” a gift—allowing you to jointly give up to $36,000 per recipient in 2024—a gift tax return must be filed, even if no tax is ultimately due. An exception applies in community property states.
• Non-cash gifts: Gifts of property, stock, or other assets that don’t have a clear monetary value may require a return to document the valuation.
• Gifts to trusts: Often, gifts to trusts are required to be reported on a gift tax return, especially if there are beneficiaries (current or future) that are deemed to be more than one generation younger than the transferor. Even when gifts to trusts aren’t required to be reported, it is often recommended to report on a gift tax return.

Why Filing Can Be Recommended

Even if a gift tax return isn’t strictly required, it can still be beneficial to file one. Here’s why:

• Establishing Value: Filing a return creates a clear, documented record of the gift’s value, which can be helpful for future tax planning or in the event of an IRS inquiry.
• Audit Protection: If you file a gift tax return and adequately disclose the gift’s value, the IRS generally cannot audit it after three years. This “safe harbor” rule doesn’t apply if the return contains errors, omissions, or fraud.

Don’t Miss the Deadline

The deadline for filing a gift tax return for 2024 is April 15, 2025—the same day individual income tax returns are due. If you file for an extension, the deadline moves to October 15, 2025.

Avoid Penalties

Failing to file a required gift tax return can result in steep penalties: up to 5% per month of the tax due, capped at 25%. Even if no tax is owed, not filing can cause headaches down the road.

Need Help?

Navigating the rules around gift tax returns can be tricky. If you’re unsure whether a gift requires filing a return—or you simply want peace of mind—contact us. We’re here to help ensure you meet your obligations while protecting your estate planning strategy.

HoganTaylor Estate Planning Services

HoganTaylor estate planning professionals leverage their tax and business advisory expertise to help individuals accomplish goals and minimize tax burden. If you have any questions about the content of this publication, or if you would like more information about HoganTaylor's Estate Planning services, please contact Dan Bomhoff, Estate Planning  Lead.

INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.