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I live in the US and want to give my sister who lives abroad a large amount of money to help her buy a house. I understand I will need to declare that amount which will be deducted by the amount that will be inherited tax free at my death. Do I do that with my tax declaration next year or do I need to do something now?

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It’s reported on form 709 which is due 4/15/20 (same as the tax return). You seem to understand the logistics, a form, but no tax due as it just gets counted towards the lifetime exclusion.

From the Sec 709 Instructions

When To File

Form 709 is an annual return. Generally, you must file Form 709 no earlier than January 1, but not later than April 15, of the year after the gift was made. However, in instances when April 15 falls on a Saturday, Sunday, or legal holiday, Form 709 will be due on the next business day.

And (Thanks @DilipSarwate) the form is sent to a different address -

Where To File

Effective January 1, 2019, file Form 709 at the following address.

Department of the Treasury

Internal Revenue Service Center

Kansas City, MO 64999

If submitting Form 709 by a PDS, mail to:

Internal Revenue Service

333 W. Pershing Road

Kansas City, MO 64108

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    Errrr Joe, Form 709 is not filed with the income tax return but is sent separately to a specific IRS office in Cincinnati OH, and it is due later than April 15, May 31 IIRC
    – Dilip Sarwate
    Commented Apr 19, 2019 at 0:34
  • @DilipSarwate same due date (it follows the 1040 date including extension, but that seemed an unnecessary extra). Thx for the note about address, that caught me by surprise, easy to miss. (Who reads through instructions for otherwise simple form?)
    – JTP - Apologise to Monica ♦
    Commented Apr 19, 2019 at 11:58
  • I looked at the 2016 instructions (the most recent year for which I filed Form 709) and see that I remembered the Cincinnati OH part correctly (obviously changed to Kansas City MO for 2018) but not the due date which was then (as it is now) the due date of the income tax return. One other thing to perhaps add to your answer: Save a copy of each Form 709 because the next Form that gets filled will need information from all the previously filed Forms 709. Perhaps it is worth saving these copies in the same folder as the will since the executor of the estate will also need this information.
    – Dilip Sarwate
    Commented Apr 19, 2019 at 19:30
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You don't say how much you want to give your sister, or whether you are married, or whether your sister is married. If both you and your sister are married, you and your spouse can give your sister and her spouse $60,000 per year in four gifts of $15,000 apiece without any tax consequences or tax reporting. If you do this late one year and early the next year, that is $120,000 transferred in a short period of time with no fuss at all.

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    Thank you. Neither of us is married, in any case, considering how high the exclusion is, no need for me to look for loopholes. My main concern was when form 709 had to be sent, I just did not want any penalty because of my ignorance. But thank you for your answer.
    – user
    Commented Apr 23, 2019 at 19:32
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I don't get it... why do you need to do any of this?

why can't you:

  1. just loan your sister the money. (this might be a problem as the bank might make an issue of it)

  2. buy the place together with her, and write her as the benefactor of your portion of the house in Europe? This way you don't have to pay a gift tax. It is just you buying real estate overseas. And if and when you die, that just passes on to her tax free (for 5.some million dollars)....

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    "And if and when you die" - I think you mean just "when you die".
    – Glen Yates
    Commented Apr 18, 2019 at 18:23
  • @Glen Yates: well I was actually trying to say.. . if you die before your intended heirs.. (which isn't a given) but clearly.. I didn't type what I intended.
    – sofa general
    Commented Apr 18, 2019 at 18:26
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    No worries, just a mild attempt at humor and stark realism.
    – Glen Yates
    Commented Apr 18, 2019 at 18:28
  • @Glen Yates: the thing with that lifetime exemption stuff is... it counts against your estate cap....... which is quite trackable at the end.. (which I believe is how my friend's nicely double digit millions inheritance got whittled way down... )
    – sofa general
    Commented Apr 18, 2019 at 18:57
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    Your friend's parents should have hired better lawyers; they could have easily afforded them.
    – Dilip Sarwate
    Commented Apr 19, 2019 at 19:40

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