Don\u2019t look now but the deadline for filing your 2017 federal income tax return is right around the corner. Unless you receive an extension, you must file your return by April 17, 2018 \u2014 which is less than two weeks away.\r\n\r\nIf you\u2019re like many people, you are probably focused on completing IRS Form 1040. This is the individual income tax return used by many taxpayers to report their total and adjusted gross income, deductions, exemptions, tax credits, associated taxes and amount of income tax that has been withheld by their employer- as well as any estimated tax payments made during the year\r\n\r\nHowever, if you made any gifts to your children or other family members last year, there\u2019s an additional tax form you may have to file along with your 1040. IRS Form 709 - also known as the United States Gift (and Generation-Skipping Transfer) Tax Return \u2013 which is used to report any transfers subject to federal gift and certain generation-skipping transfer (GST) taxes.\r\nDo You Need to File a Gift Tax Return?\r\nThe IRS provides detailed guidance with regard to the circumstances under which taxpayers must file a gift tax return. Generally, the rules are: if you gave gifts totaling more than last year\u2019s $14,000 annual gift tax exclusion to one person (not counting your spouse) in 2017, you will probably have to file the form. On the other hand, if you didn\u2019t give more than this amount to a single person last year, you probably won\u2019t have to file a gift tax return.\r\n\r\nThere are some details and nuances that apply to the filing of gift tax returns, though. For example, you will generally be required to file a gift tax return if:\r\n\r\n \tYou gave gifts in any amount of future interests (such as remainder interests in a trust) last year.\r\n \tYou gave gifts of community or jointly held property last year.\r\n \tYou gave gifts to a non-citizen spouse that exceed the annual gift tax exclusion amount of $149,000.\r\n \tYou want to split gifts with your spouse in order to take advantage of a combined annual gift tax exclusion of $28,000.\r\n\r\nFiling Gift Tax Returns\r\nThere are important things to note about the filing of gift tax returns. Some of them include:\r\n\r\n \tSpouses are not allowed to file a joint gift tax return. Each spouse must file his or her own Form 709 if filing is required \u2014 including if a gift of property they held together as joint tenants or tenants by the entirety was made.\r\n \tOnly individuals are required to file Form 709 \u2014 not trusts, estates, partnerships or corporations.\r\n \tYou typically must file a gift tax return even if you ultimately don\u2019t owe any tax.\r\n \tYou are not required to file a gift tax return for tax-deductible gifts you made last year to qualified 501(c)(3) charities. This assumes that you transferred your entire interest in the property to the qualifying charity.\r\n \tYou are not required to file a gift tax return to report gifts made for educational and medical expenses if they are made directly to a school or healthcare provider.\r\n\r\nSometimes, individuals give away assets that are hard to value, such as ownership shares in a closely held business, fine art or other collectibles. Some tax experts recommend that in this scenario, it may be smart to file a gift tax return even if it isn\u2019t technically required. Additionally, for those hard to value assets its recommended to hire a \u201cqualified appraiser\u201d (as defined by the IRS) to value the assets. Doing so could protect you later if the IRS ever challenges the value of the gift. Under the tax law and IRS regulations, you must include \u201cadequate disclosure\u201d of the gift on the gift tax return to start the statute of limitations running on the gift. The only way to start the statute of limitations is to file a gift tax return.\r\nHow Long Should You Keep Gift Tax Returns?\r\nDo everyone a favor, keep them indefinitely! Your heirs will need them to calculate the tax, if any, on your estate. And remember to keep them in a safe place and let those close to you know where the copies are stored. A Safe Deposit box is a great place to store them, just be sure someone knows that you have one and give a trusted relative, friend, or even trusted advisor access just in case.\r\nAnnual Exclusion Rising This Year\r\nStarting this year, the annual gift tax exclusion is rising from $14,000 to $15,000 due to inflation. So, you should use this figure when determining your Form 709 filing obligations this time next year for tax year 2018.\r\n\r\nThe details surrounding Form 709 and the filing of a gift tax return can get a little complicated, so you should consult with a tax professional about your specific situation.\r\n\r\nTo learn more about taxes and how they fit into your overall financial strategy, download our free Personal Capital Tax Guide for Holistic Planning.\r\n\r\nDownload Guide\r\n\r\nThis blog is for informational purposes only and is intended to offer guidance; not specific legal or tax advice. Clients are advised to consult their CPA before taking action based on this advice.