Gift tax center


Example where couple may be better off not consenting to split gifts because five-year spreading election becomes unavailable if gifts were split.

Assume the same facts as Example 1, except that Mary Smith has made a $12,000 gift of stock to each of their two children. If she consents to split gifts with John, then each is considered to have made $16,000 in gifts to Stephen ($10,000 in 529 contributions and $6,000 in stock gifts) and $10,000 in gifts to Susan ($5,000 in 529 contributions and $6,000 in stock gifts). Since the $16,000 in gifts to Stephen exceeds the $15,000 annual exclusion, John and May will each be required to report a $1,000 taxable gift.

Unfortunately, it appears that five-year averaging cannot be elected, since the 529 contribution (after gift-splitting) does not exceed the annual exclusion amount of $15,000, as required under the tax law.

In order to avoid reporting any taxable gifts, Mary and John may decide against gift-splitting. Mary is not required to file Form 709 since her gifts to each child are below the annual exclusion amount. John would file Form 709 as shown in Example 2, making the five-year election to stay below the annual exclusion amount.

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Ameriprise Financial instructions

Consult with your office/branch manager for instructions.

Commonwealth Financial instructions

Commonwealth Financial Advisors, you will find your portal on CommunityLink in the Financial Planning Playbook under Education Planning Tools.

LPL Financial instructions

Visit the Education Planning page in the LPL BranchNet Resource Center to access your portal.

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Visit Tools and Forms in the Education Savings Products page in 3DResources to access your portal.

Raymond James instructions

Visit the 529 Plan Resource Center on RJ Net to access your portal.

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Visit the 529 Department page on BairdWeb to access your portal.


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