Receiving a generous gift of money can be a wonderful experience, but it’s essential to understand the potential tax implications. This guide will outline how to determine if you owe Tax From Gift Money and how to request necessary tax information from the IRS.
Determining Tax Liability on Gift Money
In the United States, the giver, not the recipient, is generally responsible for paying taxes on gifts. This tax is known as the gift tax. However, there are specific circumstances where you might need to be aware of the tax implications as the recipient. For example, if the gift exceeds the annual gift tax exclusion, the donor will need to file a gift tax return (Form 709). While you, as the recipient, might not directly owe taxes, understanding these rules can help you plan for potential future tax liabilities.
Requesting Gift Tax Return Transcripts from the IRS
You can request a transcript of a gift tax return from the IRS using Form 4506-T, Request for Transcript of Tax Return. This form allows you to access information about filed gift tax returns, which can be crucial for understanding potential tax liabilities or for estate planning purposes.
Form 4506-T instructions
Completing Form 4506-T for Gift Tax Inquiries
Accurately completing Form 4506-T is vital to ensure your request is processed efficiently. Here’s a breakdown of the key sections for gift tax inquiries:
Donor Information
- Lines 1a and 1b: Provide the donor’s full name and Social Security Number (SSN).
Recipient Information
- Lines 2a and 2b: Leave these fields blank as they pertain to the recipient of the income tax return, not the gift tax return.
Address Information
- Line 3: Enter the donor’s current address. If the donor is deceased, provide the estate representative’s name, title, and address. This address must match the IRS records.
Return Type and Tax Period
- Line 4: Leave Blank
- Line 6: Specify “Form 709” to indicate you’re requesting a gift tax return transcript.
- Line 6 a-c: Select ONLY option 6b. Do not mark any other selections in lines 6-8.
- Line 9: Enter the tax period in MMDDYYYY format. If unknown, follow the guidelines for written requests outlined below.
Attestation and Signature
- Attestation Clause: Carefully review and check the box to acknowledge your agreement with the attestation clause.
- Signature/Title: The requester must be authorized to receive the information. If you are not the donor, provide proper documentation as detailed below. For instance, a spouse would need to provide a statement indicating no probate will be commenced and a copy of the marriage certificate.
Documentation Requirements for Third-Party Requesters
If the requester is not the donor, supporting documentation is required to verify authorization. Examples include:
- Personal Representative/Executor/Executrix: Letters Testamentary or similar court documents.
- Spouse: A statement that no probate will be commenced and a copy of the marriage certificate.
- Trustee: A statement that no probate will be commenced and a Certificate of Trust or a copy of the complete Trust Instrument.
- Trust Officer: Documentation from the Bank and/or Trust Company substantiating authorization.
- Tax Professional: A copy of the initial Form 2848, Power of Attorney, filed with the IRS for the same taxpayer and tax year.
Form 2848 information
Submitting Your Request
The Form 4506-T instructions provide mailing and faxing directions based on the donor’s state of domicile. Choose the RAIVS Team in either Ogden, UT, or Cincinnati, OH.
Written Requests for Gift Tax Transcripts
If you’re unsure of the tax year the gift tax return was filed, you can submit a written request. This request should explicitly state “All Gift Tax Returns Filed” for the donor. Include the required documentation and use the same contact information provided in the Form 4506-T instructions.
Conclusion
Understanding tax implications related to gift money is crucial for both donors and recipients. Utilizing Form 4506-T correctly allows access to essential tax information. Ensure accurate completion and provide necessary documentation to avoid processing delays. Consult a tax professional if you have complex questions or require personalized advice.
