2016 Gift Tax Exclusion
For 2016, the Gift Tax Exclusion figures are $14,000 (Annual exclusion per recipient) and $148,000 (Annual exclusion for a gift to a noncitizen spouse).
Effective 2016-01-01Source: Rev. Proc. 2015-53 (IRS)Verified 2026-09-03
Who it applies to
Taxpayers who make gifts to other individuals during calendar year 2016.
What changed this year, and why
The annual exclusion for gifts under IRC § 2503 is $14,000 per recipient for calendar year 2016.
Common questions
- What is the annual gift tax exclusion for 2016?
- For 2016, the annual gift tax exclusion is $14,000 per recipient. This means a donor may give up to $14,000 to each person without the gift counting toward the donor's lifetime gift and estate tax exemption. Gifts of future interests do not qualify for this exclusion.
When a gift needs no return at all
Most donors do not have to submit Form 709 at all. You are excused from filing only if you satisfy every condition on this short list: you made no gifts to your spouse during the year, you gave no more than $14,000 to any single donee, and every gift you made was a present interest - meaning the recipient had an immediate right to use or enjoy the property. If any one of those conditions is not met you must file, even if no tax is ultimately owed. There is also a separate, complete exemption for people whose only gifts during the year were deductible transfers to qualifying charities, provided the donor parted with the entire interest in the property. Keep in mind that the $14,000 figure is the 2016 annual exclusion per recipient; it is indexed for inflation and changes from year to year. Gifts to a U.S.-citizen spouse are generally unlimited and do not by themselves trigger a filing requirement, which is why the first bullet asks specifically about gifts to a spouse.
Who does not need to file. If you meet all of the following requirements, you are not required to file Form 709. You made no gifts during the year to your spouse. You did not give more than $14,000 to any one donee. All the gifts you made were of present interests.
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
The gifts the exclusion does not cover
The annual exclusion of $14,000 per donee applies only to gifts of present interests. A present interest means the donee has the immediate right to use, possess, or enjoy the property or the income from it. A future interest, by contrast, is any gift where the donee's rights to use, possess, or enjoy the property will not begin until some later date. Future interests include reversions, remainders, and other similar interests or estates. Because a future interest does not qualify for the annual exclusion, the donor must report it on Form 709 even when its value is well below $14,000. There is no shortcut that lets a future-interest gift slip under the annual exclusion threshold.
A gift of a future interest cannot be excluded under the annual exclusion. A gift is considered a present interest if the donee has all immediate rights to the use, possession, and enjoyment of the property or income from the property. A gift is considered a future interest if the donee's rights to the use, possession, and enjoyment of the property or income from the property will not begin until some future date. Future interests include reversions, remainders, and other similar interests or estates.
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Who actually owes the gift tax
The person who makes the gift is the one who owes any gift tax that becomes due. The IRS looks to the donor first, not the person who received the property. If the donor fails to pay, however, the liability can shift: the recipient of the gift may then have to pay the tax out of the property received. This rule is consistent with the broader principle that gift tax is an excise tax on the act of transferring property, not a tax on the receipt of it. When a donor dies before a return is filed, the obligation passes to the donor's executor, who must file the return on behalf of the estate. Because the donor bears the primary responsibility, donors often plan gifts with an eye on their own lifetime exemption and marginal rates rather than the recipient's situation. The donee generally has no reporting obligation of their own, though the donee may later need to account for the donor's basis when the property is eventually sold.
The donor is responsible for paying the gift tax. However, if the donor does not pay the tax, the person receiving the gift may have to pay the tax. If a donor dies before filing a return, the donor's executor must file the return.
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Splitting a gift with your spouse
A married couple cannot file a single joint gift tax return. Each spouse files his or her own Form 709. If both spouses agree, however, they may elect to treat every gift either of them makes to a third party during the calendar year as having been made one-half by each spouse. To elect, both spouses must have been married to each other at the time of the gift, and if either becomes divorced or widowed during the year, neither may remarry before the year ends. Neither spouse can have been a nonresident alien at any time during the year. Once the election is made, it applies to all gifts made by either spouse for the entire calendar year; you cannot split some gifts and not others. The couple files both returns together in the same envelope.
Lines 12–18. Split Gifts A married couple may not file a joint gift tax return. However, if after reading the instructions below, you and your spouse agree to split your gifts, you should file both of your individual gift tax returns together (that is, in the same envelope) to help the IRS process the returns and to avoid correspondence from the IRS. If you and your spouse agree, all gifts (including gifts of property held with your spouse as joint tenants or tenants by the entirety) either of you make to third parties during the calendar year will be considered as made one-half by each of you if: You and your spouse were married to one another at the time of the gift; If divorced or widowed after the gift, you did not remarry during the rest of the calendar year; Neither of you was a nonresident not a
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
When the return is due
Form 709 is an annual return, filed one year behind the calendar year in which the gifts were made. For gifts made during 2016, the return must be filed no earlier than January 1, 2017, and no later than April 15, 2017. If April 15 falls on a Saturday, Sunday, or a legal holiday, the deadline shifts to the next business day. For 2016 gifts, that final due date was April 18, 2017. An automatic six-month extension is available, pushing the deadline to October 15, 2017 (or the next business day if that date falls on a weekend or holiday). If the donor died during 2016, the executor must file the donor's 2016 Form 709 no later than the earlier of the due date - including extensions - of the donor's estate tax return, or April 18, 2017, or any extended due date granted for the gift tax return. Filing on time is especially important when the return is meant to start the statute of limitations running on the IRS's ability to revalue the gift.
When To File Form 709 is an annual return. Generally, you must file the 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.
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Room you do not use for one person this year is simply gone
Under the 2016 federal gift tax rules, the annual exclusion is computed separately for each donee on a calendar-year basis. If you give a donee less than $14,000 in 2016, the unused portion of that donee’s exclusion is lost. It cannot be added to another donee’s exclusion, and it cannot be carried forward to a future year. The exclusion exists only for the year in which the gift is made and only for the donee to whom the gift is made; any room you do not use for that person in that calendar year simply disappears.
The first $14,000 of gifts of present interest to each donee during the calendar year is subtracted from total gifts in figuring the amount of taxable gifts.
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Understating what a gift was worth carries its own penalty
Under the 2016 federal gift tax rules, reporting a gift at a value well below its actual worth can trigger a penalty in addition to the tax owed. A substantial valuation understatement occurs when the reported value of property entered on Form 709 is 65% or less of the actual value of the property. A gross valuation understatement occurs when the reported value listed on the Form 709 is 40% or less of the actual value of the property. These understatement penalties are separate from penalties for willful failure to file or willful attempt to evade tax. The purpose is to discourage donors from deliberately undervaluing gifts in the hope that the IRS will not challenge the reported amount; even if the understatement results from negligence rather than intent, the penalty can still apply.
There are also penalties for willful failure to file a return on time, willful attempt to evade or defeat payment of tax, and valuation understatements that cause an underpayment of the tax. A substantial valuation understatement occurs when the reported value of property entered on Form 709 is 65% or less of the actual value of the property. A gross valuation understatement occurs when the reported value listed on the Form 709 is 40% or less of the actual value of the property.
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
Giving more than the exclusion does not automatically mean tax is owed
Giving more than the annual exclusion to one recipient in a year does not automatically mean gift tax is owed. Every dollar of taxable gifts above the annual exclusion is applied against a separate, much larger lifetime allowance - the basic exclusion amount under IRC section 2010(c), the same allowance a person's estate draws on at death. Tax is due only once a donor's cumulative taxable gifts exceed that allowance. The IRS's instructions for Form 709 state it directly: for 2016, the donor's basic exclusion amount is $5,450,000. Because that amount changes from year to year and can also be changed by legislation, see this site's estate tax exemption page for how the current year's basic exclusion amount is set and how it interacts with lifetime gifts.
On line 1, enter the donor's basic exclusion amount; for 2016, this amount is $5,450,000.
2016 Instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2015-53 (IRS)
- Annual exclusion per recipient
(1) For calendar year 2016, the first $14,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.
- Annual exclusion for a gift to a noncitizen spouse
(2) For calendar year 2016, the first $148,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under §§ 2503 and 2523(i)(2) made during that year.