Why Filing a Gift Tax Return Might Be in Your Best Interest

ARTICLE | April 04, 2025

Transferring wealth to loved ones can be a wonderful way to share your good fortune, but it also introduces an important consideration: gift taxes. Often, people assume that filing a gift tax return is only necessary if they owe a tax payment. In reality, even if no tax is due, filing a gift tax return (Form 709) can offer significant advantages. One critical advantage is that it allows you to meet “adequate disclosure” requirements, which starts the clock on a limited time frame for the IRS to examine the value of your gift. By proactively filing and fully disclosing the details of your gift, you help limit any future scrutiny from tax authorities.

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Choosing to file a gift tax return in a careful, timely manner does more than just comply with the law. It ensures that both you and your beneficiaries receive the full benefit of the transfer without unexpected tax questions surfacing in the future. By proactively detailing your gift and satisfying the adequate disclosure rules, you effectively limit the period during which the IRS can challenge your valuation or reclassify a portion of your transfer as a taxable gift.

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