Summary: I have to file a U.S. gift tax return. The accountant wants $750 to prepare it. I think I can prepare it myself. Bad idea?
My spouse and I are citizens and residents of the United States. There is a limit on the amount of money we can give to our kids in any calendar year without triggering the obligation to file a gift tax return, and I have inadvertently exceeded it. Whoops! (As problems go, that is not a bad one to have.)
In any case we will not actually owe any gift tax. There is a lifetime exemption of 5.5 million dollars each and I do not expect that we will ever come anywhere close to exceeding this. But we are required to file the returns (IRS Form 709) for tax year 2018. My tax accountants say they usually bill around $750 to prepare a Form 709. Wow!
I am considering whether it would be reasonable to prepare the returns myself. I have looked at the form and I am in the process of reading the instructions, which do not seem confusing or unreasonably long. It appears to me that our gift tax situation is unusually simple:
- Only the one gift so far
- No tax actually owed
- No gifts to report from prior years
- No DSUE
- No GST
- No QTIP
- I would be filing a nearly-identical return for my spouse
- The gifts were to a Qualified Tuition Program
neither of which seems too difficult. Also, I do not expect to take advantage of the option to pro-rate the gift over five years, as it wouldn't get me out of filing the returns this year.
The Paperwork Reduction Act notice in the Form 709 instructions estimates that completing and filing the form will total around six hours, which I consider reasonable effort for avoiding a $750 accountant bill. Also I expect it will take somewhat less time than this, as I have few records to gather.
So from here it looks reasonable, but perhaps I am in a Dunning-Kruger situation, and I am so ignorant of tax preparation matters that I am oblivious to my own incompetence.
- Is this obviously a terrible idea? If so, what might go wrong?
- If it's not an automatically terrible idea, are there any surprise pitfalls that I might not foresee?
- What else should I have asked but I didn't know to ask?