If I gifted more than the $17k annual gift tax exclusion in 2023, how much tax will I actually owe?

Whoa, seriously?? So I file the form 709 but don't actually pay anything? That's such a relief! Does that mean the lifetime exclusion is basically like a $12.92 million "allowance" for gifts over the annual limit?

Exactly! You file the form but won't owe any tax now. The lifetime exclusion works exactly like an "allowance" as you put it. Every dollar you gift over the annual exclusion ($17k in 2023) reduces your lifetime exclusion. In your case, you're using up $6k of your $12.92 million lifetime exclusion. So you still have $12.914 million left for future gifts or your estate. This is why very few people ever pay gift tax - you'd need to give away nearly $13 million over your lifetime (beyond the annual exclusions) before owing anything.

Does that service actually help with the form filing itself? I'm going to be in the same situation next year since I'm helping my kid with college and the amount will definitely go over the limit. The form looks complicated.

I'm a bit skeptical about these tax tools. How accurate was it for your specific situation? Did you cross-check the information with an actual tax professional?

The service doesn't file the form for you, but it does give you a detailed breakdown of exactly what goes where on Form 709. I found this super helpful because the form instructions from the IRS are pretty dense. It basically translated everything into plain English and showed me which sections applied to my situation. As for accuracy, I actually did have my accountant review everything afterward, and she confirmed it was all correct. She was impressed I'd figured out the form myself since she said clients usually mess it up. The tool was spot-on with the lifetime exclusion calculation and how to report split gifts (which wasn't even my situation, but good to know about).

Wait, how does that actually work? I've spent literal days trying to reach someone at the IRS about a property gift issue. Does this service somehow jump the queue or what?

Yeah right. No way this works better than just calling repeatedly. The IRS prioritizes calls in order - there's no magic "skip the line" button. Sounds like a scam to me.

It doesn't jump the queue in the way you might think. What it does is automate the calling process. The IRS phone system hangs up on you when call volumes are too high, so you have to keep redialing to get in queue. This service basically does the redialing part for you using their system, and once they get through and secure a spot in line, they transfer the call to you. I was super skeptical too, honestly. I thought it would be some kind of scam or wouldn't work. But after spending three days trying to get through myself with no luck, I figured it was worth a shot. The system called me when it got through to the IRS, and then I was talking to an actual IRS agent about 20 minutes later. The agent answered my questions about how to report a partial interest in property I gifted to my child.

Oh that's interesting! What if I already gave the money directly to my sister though? She used it for her house down payment, not education or medical. Is there any way to reclassify it or am I stuck filing the 709?

Unfortunately for a house down payment, there's no exemption like there is for education or medical expenses. You'll need to file the 709 for the amount over $17k. The good news is, as others mentioned, you won't actually pay tax on it now - it just counts against your lifetime exclusion. For future reference though, the medical/education exemption is really valuable. I paid $35k directly to my daughter's college last year and didn't have to file any gift tax forms since it went straight to the institution. It's a great planning tool if you're helping family with those specific expenses.

Gifts between spouses who are US citizens are completely exempt from gift tax! You can transfer unlimited amounts between you and your spouse without any gift tax implications or filing requirements. This is called the unlimited marital deduction.

That's such a smart strategy! I wish I had known about this timing trick before I helped my sister. Could have saved myself the hassle of filing Form 709 entirely. For anyone reading this who might be in a similar situation in the future - this is definitely worth planning around if you have the flexibility with timing. Thanks for sharing this tip!

This is really helpful information! I had no idea about the gift splitting option for married couples. So if my husband and I want to help our daughter with a house down payment next year, we could potentially give her $34k total without any forms to file? That would cover a lot more of what she needs. Do both spouses need to consent to this even if only one writes the check, or is it automatic if you're married?