What IRS Form 709 (2020) Is For

IRS Form 709 (2020) is the United States Gift (and Generation-Skipping Transfer) Tax Return used to report gifts you made during calendar year 2020 that exceed certain thresholds. You must file this form if you gave gifts totaling more than $15,000 to any one person (other than your spouse) during 2020, made any gifts of "future interests" regardless of amount, or want to split gifts with your spouse (IRS Instructions for Form 709 (2020)).

When You'd Use Form 709 for 2020 (Late or Amended Filing)

Taxpayers typically file late or amended Form 709 returns for 2020 after receiving IRS notices about unreported gifts, during audits of other tax years that reveal gift transactions, or when discovering errors on previously filed returns.

Unlike income tax returns, there's generally no monetary penalty for filing Form 709 late if no gift tax is actually owed, since most gifts only reduce your lifetime exemption rather than creating immediate tax liability.

However, late filing can result in missed generation-skipping transfer (GST) tax elections and prevents the three-year statute of limitations from starting, leaving the return open to IRS scrutiny indefinitely (IRS.gov/Forms-Pubs/About-Form-709).

Key Rules Specific to 2020

For 2020, the annual gift exclusion was $15,000 per recipient, and the lifetime gift and estate tax exemption was $11.58 million per person.

Gifts to non-citizen spouses were limited to $157,000 annually. The basic credit amount was $4,577,800, and the top gift tax rate remained at 40%.

These amounts differ from current-year figures due to annual inflation adjustments, making it crucial to use the correct 2020 form and instructions when filing late returns (IRS Instructions for Form 709 (2020)).

Step-by-Step (High Level)

• Gather Documentation: Obtain account transcripts from IRS.gov to review any prior Form 709 filings and collect all 2020 gift documentation including appraisals, trust documents, and transfer records
  
  
• Complete Correct Form: Use the official 2020 Form 709 and instructions—never use current-year forms for prior-year gifts
  
  
• Attach Required Schedules: Complete Schedules A (gift computation), B (prior period gifts), C (DSUE amounts if applicable), and D (GST tax) as needed
  
  
• Mail or E-file: Send completed return to Kansas City, MO processing center or use approved e-filing software; mark "Amended" across the top if correcting a previously filed return
  
  
• Retain Copies: Keep all supporting documentation for at least four years after filing
  
  

Common Mistakes and How to Avoid Them

• Missing GST Elections: Failing to make generation-skipping transfer tax elections on gifts to trusts can result in automatic allocations that waste exemption; always complete Schedule D when gifts involve trusts with skip-person beneficiaries
  
  
• Incorrect Annual Exclusions: Claiming the $15,000 annual exclusion on gifts of illiquid assets (like partnership interests) without confirming the recipient has immediate access to use, possession, and enjoyment of the property
  
  
• Gift-Splitting Errors: Improperly electing to split gifts in years involving divorce, death, or when one spouse is a trust beneficiary; both spouses must sign and file when splitting gifts
  
  
• Inadequate Disclosure: Not providing sufficient detail about hard-to-value assets prevents the statute of limitations from starting; include detailed descriptions, appraisals, and valuation methods (IRS Regulations section 301.6501(c)-1(e))
  
  
• Schedule B Mistakes: Incorrectly reporting or omitting previously filed returns and lifetime exemption usage, which affects current-year tax calculations
  
  
• DSUE Amount Errors: Failing to properly report and support deceased spousal unused exclusion amounts with required Form 706 attachments
  
  

What Happens After You File

The IRS typically takes 8-12 months to process gift tax returns, though complex returns involving trusts or valuation issues may take longer.

If you owe gift tax, payment is due with the return regardless of processing delays. You can request installment agreements using Form 9465 if unable to pay the full amount immediately.

The IRS may send notices requesting additional documentation or proposing adjustments—respond within the timeframe specified to preserve your appeal rights.

If your return triggers an audit, you'll receive a formal examination notice with instructions for providing records and scheduling meetings with IRS personnel (IRS Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges).

FAQs

Can I still file Form 709 for 2020 even though it's years late?

Yes, there's no filing deadline if gift tax is owed, and typically no penalty if no tax is due, though filing late prevents the statute of limitations from starting.

Will I owe penalties and interest on a late 2020 gift tax return?

Generally no penalties if no gift tax is owed, but interest accrues on any unpaid gift tax from the original due date (April 15, 2021) until paid in full (IRS Section 6651).

Do I need account transcripts before filing my late return?

Yes, request transcripts from IRS.gov or call 800-908-9946 to verify any previously filed Forms 709 and lifetime exemption usage before preparing your return.

Can I get a refund if I discover I overpaid gift tax in 2020?

The refund statute of limitations is generally three years from the return due date or two years from payment date, whichever is later—likely expired for 2020 unless you filed within that timeframe.

Should I amend my state gift tax return too?

Only a few states impose separate gift taxes; consult your state's tax agency if you're a resident of a gift-tax state, as federal and state gift tax rules may differ.

What if I can't afford to pay the gift tax I owe?

Request an installment agreement using Form 9465 or apply for currently-not-collectible status if facing financial hardship; the IRS offers various payment options (IRS.gov/Payments/Payment-Plans-Installment-Agreements).

Do I need a tax professional for a late Form 709?

Consider professional help for complex situations involving trusts, valuation discounts, or GST tax elections, as mistakes can be costly and difficult to correct later.

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