Transfer Taxes

Transfer taxes essentially refers to those taxes that are paid to the IRS when an individual transfers a piece of property or estate to someone else. This tax specifically applies to properties that have legal title deeds, and are usually imposed once the respective title is transferred to the new owner’s name. This tax also works as a gift tax, as one must file a form 709 whenever the total value of a gift given to a single individual exceeds $15,000 within the same calendar year.

This annual exclusion limit doubles to $30,000 for married couples who file a joint return. In other words, if you are married with kids and you both want to give them a gift or some form of property, you can do so without fear of being taxed as long as you don’t exceed the exclusion limit.

However, there is an unlimited marital deduction that applies to gifts made to spouses that happen to be U.S. citizens. In this respect, you can give your spouse as much to them as you want, either before or after your death, without having to pay a transfer tax to the IRS. Apart from that, any gifts made to other individuals, such as tuition or medical expenses, must be submitted directly to the biller and not to the individual, if you want to avoid having to pay the gift tax.

In terms of the deadline date for these transfer taxes, form 709 is usually due on or before April 15 of the year after which you made the taxable gifts. Moreover, this form is one of the few tax forms that must be printed out and mailed to the IRS, as they cannot be filed electronically.