Records to support Cash Gifts of $14,000 or less, if audited by IRS

Feb 16, 2015 1 Replies

We would like to gift my estate to my children using the Annual Exclusion (currently $14,000 per year/per spouse) and continue this approach, until all my estate is gone. We have been withdrawing Cash from my Savings Account and giving it to the 4 children ($28,000 each in 2014). The only records that I have to show the IRS if audited, are the "Withdrawals of Cash" from my Savings Accounts. Should I file a Form 709 "US Gift Tax Return" this year (2015 for



2014) even though it is less than the "Annual Exclusion limit" of $14,000, so that I have additional records of the monies gifted? I do not want to ask my children to sign receipts etc. and feel that the Bank records should suffice. What do you suggest? Thank you, Bill

Are you in a community property state? If not, is the $28,000 actually equally from each of you from the standpoint that you are giving what each of you legally owns?

If not, you need to file a gift tax return to elect gift splitting. This occurs when whatever is given belongs to one spouse, but is being attributed to another spouse as being within their annual exclusion amount. Even though there is no tax associated with gift splitting, a return is required to inform the IRS of the situation.

In terms of documentation, why do you give cash instead of checks?

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