A gift tax return is a history of written records of your important donations. The annual annual income details each gift for the year, as well as the cost of the assets given and the fair market value. The payee needs information on the tax to estimate your cost base and calculate the gain or loss when the asset is sold in the future. Review this information and report it to your gift tax form to determine its basis and set limits for the IRS to challenge the value set. If the gift is not reported or not fully disclosed, the IRS can conclude in the future that the transaction is not a gift basis.
Overdue fine
If you do not report and owe the tax, the fine will be calculated on the second day after the tax refund deadline. The IRS will penalize the unpaid tax at a rate of 5% per month until you complete all of the tax arrears. The maximum amount of this fine is 25% of the net tax. If you have not reported for more than 60 days, the fine is 100% of the unpaid tax or the lower of the $100.
Additional fraud penalty
If the US Internal Revenue Service believes that you did not report the gift tax in order to avoid paying taxes, you will be charged a 15% additional fraud fine every month. The fraud penalty is capped at 75% of the tax owed.
If you have received a gift worth more than $15,000 from a friend or relative, please contact us as soon as possible to help you with your gift tax.