Understanding Form 709 and Gift Taxes for a House Down Payment Gift

7 Thanks for this explanation. So just to make sure I understand - if my mom gives me $100k and my dad gives me $100k, they each need to file Form 709 to report the $83k above the annual exclusion ($100k minus $17k)? But they won't actually pay any taxes unless they've already given away millions in their lifetime?

4 That's exactly right! Each parent would file their own Form 709 reporting the amount that exceeds their annual exclusion. So in your example, each parent would report $83,000 as using up some of their lifetime exemption. The form essentially keeps a running total of how much of their lifetime exemption they've used. No actual gift tax is due until that lifetime amount is exceeded. Most people never hit that limit unless they have a very substantial estate. One tip: Make sure they clearly document this is a gift and not a loan if you want to avoid complications. Some mortgage lenders might get nervous about large deposits without clear documentation.

19 Did they actually help with filling out the Form 709? My parents are pretty tech challenged and I'm worried they'll mess up the form. Also, can this service tell us if my parents have used up any of their lifetime exemption already? They've given smaller gifts to all their kids over the years but never filed anything.

21 I'm skeptical about these online tax services. How is this better than just going to an accountant? Form 709 seems pretty straightforward from what I'm reading online. Can they actually give legal tax advice?

13 They don't fill out the form for you, but they do provide a detailed guide specific to your situation that makes completing it much easier. My parents aren't tech-savvy either, but the instructions were clear enough that they could follow along step by step. The service absolutely helped us understand previous gift history. They asked specific questions about prior gifts and explained that since my parents had never filed 709s before, they needed to consider those past gifts that exceeded the annual exclusions. They don't give legal advice, but they explain the IRS guidelines clearly and help you understand how they apply to your specific situation - which was way more helpful than generic online articles.

16 Wait, what is this exactly? You pay someone to wait on hold with the IRS for you? How does that even work? And why would you trust a third party to connect you to the actual IRS?

21 This sounds like a scam. Why would I pay for something I can do myself for free? I've gotten through to the IRS before - yeah it takes time but it's not impossible.

10 It's not someone waiting on hold for you - it's an automated system that navigates the IRS phone tree and holds your place in line. When they reach an agent, you get a call back and are connected directly to that IRS agent. You're talking to the real IRS, not a third party. I was skeptical too, but after spending literally hours on different days trying to get through during tax season, this saved me enormous frustration. You're right that it's technically something you can do yourself for free if you have unlimited time and patience - I just didn't. And the specific guidance I got from the IRS agent about how to properly document previous unreported gifts was incredibly valuable.

12 Is the $18,000 per person or per couple? Like if my wife and I both receive $18,000 from my mom, is that $36,000 excluded or still just $18,000 total?

9 The $18,000 annual exclusion is per donor per recipient. So your mom could give $18,000 to you and another $18,000 to your wife (totaling $36,000) without needing to file a gift tax return. It gets even better if both your parents give - each parent could give $18,000 to each of you, potentially allowing $72,000 to transfer without any reporting requirements ($18,000 × 4). So for larger gifts like the OP's situation, having both parents gift to both spouses maximizes the amount that can transfer without requiring a Form 709 filing.

4 Most lenders need these basic elements in a gift letter: - Names of the givers and recipients - Property address you're purchasing - Exact gift amount - Statement that it's a gift with no expectation of repayment - Date and signatures of all parties For IRS purposes, the key is the "no expectation of repayment" language - that clearly establishes it as a gift. You might also want to reference that the donors understand they may need to file Form 709 if the amount exceeds annual exclusions.

18 Thanks for the breakdown! That's super helpful. Our lender has been pretty strict about documentation so I wanted to make sure we covered all the bases.