If you give someone money or property during your life, you may be subject to federal gift tax. At its core, this is a 35% tax that may apply if you give more than $13,000 to anyone in a single year. While certain exemptions and deductions apply that may allow you to avoid actually having to pay the tax, you may still be required to file a federal gift tax return by the
subsequent April 15th.
Many taxpayers assume that they can make large (and potentially taxable) gifts to their loved ones without the IRS knowing. However, this would be a false assumption.
The IRS has recently discovered a pattern of taxpayers failing to file gift tax returns for real estate transfers to family members. As a result, it launched a compliance initiative to capture data from states and counties regarding gift transfers during the period of January 1, 2005 through Dec. 31, 2010. While the IRS has faced hurdles in attempting to force California to release the data, a number of other states have complied with the IRS request for land records. These states include Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington, and Wisconsin. It is likely that the IRS will try to get data from additional states.
In order to avoid the potential for penalties, individuals who make a gift of real estate to family members should make sure that required gift tax returns are filed with the IRS in a timely
manner. If real estate transfers occurred in past years, then late returns should be completed and sent to the IRS.
subsequent April 15th.
Many taxpayers assume that they can make large (and potentially taxable) gifts to their loved ones without the IRS knowing. However, this would be a false assumption.
The IRS has recently discovered a pattern of taxpayers failing to file gift tax returns for real estate transfers to family members. As a result, it launched a compliance initiative to capture data from states and counties regarding gift transfers during the period of January 1, 2005 through Dec. 31, 2010. While the IRS has faced hurdles in attempting to force California to release the data, a number of other states have complied with the IRS request for land records. These states include Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington, and Wisconsin. It is likely that the IRS will try to get data from additional states.
In order to avoid the potential for penalties, individuals who make a gift of real estate to family members should make sure that required gift tax returns are filed with the IRS in a timely
manner. If real estate transfers occurred in past years, then late returns should be completed and sent to the IRS.
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