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Video instructions and help with filling out and completing Form 966

Instructions and Help about Can Irs Form 966 Line 10

In disaster on highway seven or nine webinar a couple of things that we're going to go through today we're going to go through some common mistakes that we've seen on gift tax returns it's extremely important this year because of the number of gift tax returns that are going to be filed that we prepare these correctly to help make sure we use the right amount of the lifetime gift exemption available to the clients and that we also provide full and adequate disclosure what we've also done is at pages 53 through 58 of the PowerPoint we provided a checklist this is pretty much all the information you're going to need to ask for from a client to prepare the gift tax return for them and then at pages 59 and 60 of the PowerPoint I have a fact pattern which we generated to be able to produce two sample 709 s the sample 709 s were also sent to you they're separate PDFs and we'll go through those as well as we're going through the program so that being said we'll go ahead and get started ok so during 2022 the lifetime gift tax exemption was increased from 1 million dollars to five million dollars that amount was increased to 5 million 120 thousand dollars for 2022 and originally it was scheduled if Congress took no additional action that on January 1st 2022 the last time gift exemption would be reduced back to 1 million dollars now I'm sure everyone's aware Congress did Act they've extended the gifting allowance made a permanent and it's indexed for inflation so it's actually increased to five million two hundred fifty thousand dollars but because there was such uncertainty and what happened is most of our clients and if they didn't make gifts in 2022 made gifts in 2022 utilizing this extra four million dollars worth of exemption that they had so because of that we need to be certain that the gift tax returns that were filed are prepared correctly and you're going to be filing a lot of gift tax returns this year so now we're going to touch on what we think are the ten most common mistakes that we see the most important thing the gift tax return can do is to provide adequate disclosure to the Internal Revenue Service if you don't provide adequate disclosure and the number one thing that you're preventing is the statute of limitations from running and typically the IRS see later has three years from the filing of a gift tax return to audit the gift but if they don't have adequate disclosure then that statute of limitations doesn't run second thing that we see is that the clients annual exclusion is not used appropriately to reduce the value of the taxable gift now when that happens you're wasting the clients exemption and making it so that instead of possibly having $100,000 gifts being reported save seventy-six thousand dollars if they have twenty four thousand dollars worth of crummy BS available you'd report it as one hundred wasting that twenty four thousand and couldn't be used in the future we'll talk about that in more detail in a bit air 2 another thing that we have it's not reducing the reportable value of the gifts for gifts that are made for education or medical exclusions again that's going to waste your exemption another item we see commonly is misreporting gifts of 529 plans 529 plan gifts can be split up spread out ratably over a five year period and if you don't do that then you might be using some exemption that you don't need to we're going to touch on that again in a little bit another problem we see and this is something that is pretty common is assuming that the annual exclusion gift also qualifies for the GST annual exclusion and we're going to touch on this in a while but most times when a gift is made to a trust if that trust benefits your child and your grandchildren it's not going to qualify for the GST annual exclusion so even if you have crummy right of withdrawal powers that reduce the value of the gift for gift tax purposes you're still going to need to allocate the full amount for GST purposes another item we see is and it's very simple but if you make a copy or a gift to a trust when you actually file the gift tax return you need to either provide a copy of a trust or a brief description of the trust to provide adequate disclosure now I think it's best practice to go ahead and just provide a copy of the trust because if you do a brief description it might be inaccurate if you provides a copy you know you've satisfied the requirement for adequate disclosure one other thing that we see quite often is that when you make a gift to a trust unless it's a trust it's only for the benefit of your grandchildren and more remote descendants that gift should be reported on Schedule A Part three a lot of times we see it being reported on Schedule A Part two it's not clear whether that would adequate disclosure to not be provided so just make sure you're reporting it the right way a couple other things some preparers try to file a joint tax return that's not allowed if you split the gift with your spouse that's permissible in most situations but typically you and your and your spouse are both going to have to file to give tax returns to split it another thing that we've seen quite common our mistakes related to gift splitting there's a lot of traps for that we're going to talk about them in a few minutes and then finally the other item that we see is possibly opting out of the automatic exclusion of GST exemption.

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