New Gift-Splitting Procedures for Gift Tax Returns
The IRS made some changes to its 2024 Gift Tax Form 709. Among the changes, a new procedure for electing gift-splitting among spouses has been established.
What is Gift Splitting?
A gift-splitting election permits spouses to share 50/50 in gifts made to third parties.
Example: Dad gifts $30,000 of his cash to Child. During 2024, but for the gift splitting election, this gift would result in a $12,000 taxable gift (the excess over $18,000). If Mom agrees (or consents) to gift-splitting, the gift will be treated as coming 50% from her, thereby eliminating the $12,000 taxable gift.
For as far back as I can remember, the consenting spouse was required to sign page 1 of the donor spouse’s gift tax return to consent to the gifts. And, likewise, if the consenting spouse was required to file his or her own gift tax return, the donor spouse signed the consent on that gift tax return. This process has been replaced, and now the consenting spouse no longer signs the gift tax return, however, a signed and dated Notice of Consent to split gifts is required to be attached to the donor spouse’s gift tax return (and vice versa). The gift-splitting election has now been given its own separate Part III, found on page 2 of the Form.
Per the instructions, “The Notice of Consent must be signed and dated by the consenting spouse and must include a statement that the consenting spouse is electing to treat all gifts made to third parties as having been made one-half by each spouse.”
Per the instructions, “The Notice of Consent may generally be signed at any time after the end of the calendar year. However, there are two exceptions.
- The consent may not be obtained after April 15 following the end of the year in which the gift was made. But if neither you nor your spouse has filed a gift tax return for the year on or before that date, the consent must be made on the first gift tax return for the year filed by either of you.
- The consent may not be obtained after a notice of deficiency for the gift tax for the year has been sent to either you or your spouse.”
The instructions appear to need some additional clarification!
