Sending money or shares to family in Canada or China: Form 709

Do I owe US gift tax when I send money or shares to family abroad?

Tax is payable only after your lifetime taxable gifts use up the basic exclusion, but Form 709 can be required long before that. US gift-tax rules apply to a US citizen, or anyone domiciled in the US, wherever the donor lives and whichever country receives the gift; sending the gift to Canada or China does not create an exemption. Gift tax regulations, section 25.2501-1.

Filing and paying are separate questions. Form 709 reports gifts that exceed an exclusion and tracks the lifetime exclusion used. The basic exclusion shared by gift and estate tax is US$15,000,000, reduced by prior taxable gifts; certain surviving spouses may have additional exclusion. Revenue Procedure 2025-32, section 2.14; IRS gift-tax questions; Form 709 instructions.

The donor files and pays. A relative abroad normally has no US gift-tax return merely for receiving your gift, but if the tax is not paid when due, the recipient is personally liable for it up to the value of the gift, and the tax is a lien on the gifts for 10 years from the date the gifts are made. 26 USC 6324(b); Form 709 instructions.

For a noncitizen donor, gift tax looks at domicile, not immigration status. You acquire a domicile by living somewhere, even for a short time, with no definite present intention of moving away. A green card is not conclusive evidence of US domicile, and a person can be a US resident for income tax but a nonresident for gift tax. A noncitizen who is not domiciled in the US is taxed on gifts of US real or tangible property, reported on Form 709-NA; that case is outside this page. IRS: Gift tax; Form 709 instructions.

How much can I give each person before I must file Form 709?

The ordinary annual exclusion is US$19,000 per donor, per recipient, per calendar year. Gifts above that amount generally require Form 709 even when no payment is due. The exclusion applies to a present interest, meaning the recipient can use or enjoy the gift now. IRS filing questions; IRS current figures.

Giving to several relatives creates a separate annual exclusion for each recipient. Giving cash and shares to the same relative uses one combined exclusion. If filing is required, list all the gifts to that recipient on Schedule A and claim the exclusion on Part 4, line 2, rather than listing only the excess. A gift above the exclusion to a grandchild, or anyone two or more generations below you, also triggers generation-skipping transfer reporting (Schedule A, Part 2, and Schedule D), which this page does not cover. Form 709 instructions, Schedule A.

Married couples. Each spouse is a separate donor with a separate annual exclusion, and spouses cannot file a joint Form 709. If you were married when the gifts were made and each spouse is a US citizen or domiciled in the US, you can elect to treat every gift either of you makes to other people that year as made half by each. The donor checks Yes in Part III of Form 709 and attaches a Notice of Consent signed by the other spouse. Both spouses generally file, even when each half is within the exclusion; only the giving spouse files in narrow cases, such as when only that spouse gave, all gifts were present interests, and none to one person exceeded twice the annual exclusion. The election covers all of both spouses' gifts to others that year and makes each jointly and severally liable for the other's gift tax. Consent is due by April 15 after the gift year; if neither spouse has filed by then, it goes on the first return either files. It cannot be given after the IRS sends a notice of deficiency. Form 709 instructions, Part III; 26 USC 2513; Gift tax regulations, section 25.2513-1.

I send my parents money every month: how do the gifts add up?

Add every transfer to the same person in the calendar year. If the total passes US$19,000, Form 709 is generally required, even when no tax is due. Splitting a gift into monthly payments does not restart the exclusion. Medical bills you pay directly to the hospital or care provider are left out of that total (see below); money you send a parent for those bills is not. IRS annual-exclusion rules.

A transfer into one parent's own account is a gift to that parent; if each parent actually receives and controls a share, each has a separate annual exclusion. If the money goes into an account the parents own jointly, who received it depends on who owns the account and can withdraw from it, so keep the account documents. If you keep a joint account that you can empty without the relative's consent, there is a gift only when the relative withdraws money for their own use, and only for the amount taken out. Form 709 instructions, Joint Tenancy. For reporting the account itself, see Foreign account reporting.

Do tuition and medical bills I pay for family abroad count against the limit?

No, if you pay the school or the care provider directly. Qualifying tuition and medical payments made that way are not treated as gifts and leave the annual exclusion free for other gifts. Money sent to your daughter's Canadian account for tuition, or to a parent to repay a medical bill, is a gift to that relative and counts toward the annual exclusion. Gift tax regulations, section 25.2503-6.

Medical care must meet the statutory definition; a living-cost allowance does not qualify merely because the recipient is ill. Amounts reimbursed by the recipient's insurance do not qualify for the medical exclusion. Section 25.2503-6; Form 709 instructions.

Is giving appreciated shares different from giving cash?

For gift-tax reporting, shares count at their fair market value when given, rather than what you paid for them. An outright gift of ordinary investment shares generally does not itself produce US capital-gain income; selling the shares first and giving cash can produce a taxable sale. Stock of a passive foreign investment company (a foreign corporation with mostly passive income or assets) is an exception: the Code lets regulations treat a gift of it as a taxable transfer. Form 709 valuation instructions; IRS gift-tax questions; Publication 544; 26 USC 1297(a); 26 USC 1291(f).

For ordinary publicly traded shares, the US gift-tax valuation generally uses the average of the highest and lowest quoted selling prices on the gift date. Special rules apply when there are no sales that day or the shares are not publicly traded. A closing price alone may therefore be insufficient. Gift tax regulations, section 25.2512-2.

A gift of shares is generally complete when the certificate is delivered to your relative or, if sent through your bank, broker or transfer agent, when the shares are transferred on the company's books. Gift tax regulations, section 25.2511-2. A private-company interest or a transfer involving payment or debt needs a separate review. Family gifts are generally not deductible on the donor's federal income-tax return. IRS gift-tax questions.

What cost does my relative use when selling gifted shares?

Which cost your relative uses depends on which country taxes their later sale. A US taxpayer generally starts from your cost; a Canadian taxpayer starts from the share value on the gift date. Keep both: your adjusted cost (what you paid, after the adjustments the tax rules require) and the gift-date value. Publication 551; Gift-basis regulation; Income Tax Act, section 69.

These are cost rules, not a conclusion that the relative's later sale is taxable in the US.

I live in Canada and am a US citizen: is a gift of shares a sale in Canada?

A Canadian tax resident's gift of ordinary investment shares to a relative other than a spouse or common-law partner generally counts as a sale at fair market value in Canada. A gain may therefore arise on the Canadian return for the gift year (generally due April 30 of the next year) even though the donor receives no cash. If you became resident in Canada after buying the shares, your Canadian cost is generally their market value on the day you became resident, not what you paid. If the Canada–US treaty treats you as resident only in the US, Canada deems you non-resident and this rule needs separate review. CRA: Transfers of capital property; Income Tax Act, paragraph 69(1)(b); section 128.1; section 250(5); treaty Article IV.

The US citizen still tests the same transfer under US gift-tax rules. Canada taxing a gain does not remove the Form 709 obligation. The two countries may tax different events and use different costs, so keep both cost records.

A gift of capital property to a spouse or common-law partner generally produces no capital gain or loss in Canada, but only when you and your spouse are both resident in Canada at the time; a spouse who is not, such as one living in China or the US, does not qualify. You can elect out in your return for the year of the gift, which reports the gain now. Later gains on the property are generally taxed to you. CRA: Transfers of capital property; section 73(1); section 74.2. For coordinating the two countries' income-tax returns, see Americans living in Canada.

What changes if my spouse is not a US citizen or lives abroad?

For an outright gift to a spouse, citizenship matters more than where the spouse lives. Qualifying gifts to a US-citizen spouse are generally deductible without limit (the marital deduction); qualifying present-interest gifts to a noncitizen spouse instead have an annual exclusion of US$194,000. Limited or future interests can change the result. Form 709 instructions; IRS current spouse exclusion.

For income tax, the usual rule that a transfer between spouses produces no gain or loss does not apply when the receiving spouse is a nonresident alien. That matters for a sale, a part-sale or property with debt, not for an outright gift. 26 USC 1041(d); Publication 544.

For spouse transfers and the separate joint income-tax return decision, see Married to a nonresident.

Is a down-payment transfer a gift or a loan?

Money for a relative's down payment is generally a gift if you do not receive equivalent value or a genuine repayment obligation. Calling the transfer a loan does not settle its tax treatment. IRS: Gift tax.

A loan with a genuine repayment obligation is not a gift of the money lent. If you charge less than the IRS minimum rate (the applicable federal rate), the interest you give up can be a gift, and can also count as interest income to you; repaying principal alone does not remove that issue. For loans of US$100,000 or less between you and the borrower, the income side is capped: the interest counted is limited to the borrower's net investment income, treated as zero when that is US$1,000 or less, unless avoiding tax is a principal purpose. Forgiving a debt can be another gift. The below-market-loan rules generally do not apply to a loan between individuals while the total owed between you and the borrower stays at or below US$10,000, but not for a loan used to buy income-producing assets, and other conditions can apply. Document the borrower, amount, interest, repayment dates and actual repayments. 26 USC 7872; Form 709 instructions.

How do I file Form 709, and when is it due?

Form 709 is its own return, separate from your income-tax return. It is due April 15 after the gift year, or the next business day when that date falls on a weekend or legal holiday. A required return must be filed even if the lifetime exclusion covers all gift tax. IRS filing questions; 26 USC 6075(b).

If you extended by either method, check the box on line 16 of Part I. See Form 709 instructions, filing and extensions. Use the return and instructions for the gift year: the linked instructions may be for an earlier year and show earlier figures, while this page's figures come from Revenue Procedure 2025-32. You can e-file Form 709 through the IRS Modernized e-File system or mail it; a private delivery service uses a different street address, and the instructions list both. IRS electronic-filing guidance.

Before preparing the return, gather each recipient's name, address and relationship to you; gift dates, descriptions and amounts, with exchange-rate evidence; share counts, purchase records, adjusted costs and gift-date valuations; tuition and medical invoices (separating tuition from housing and other charges) and insurance reimbursements; prior Forms 709; and your spouse's citizenship, domicile and any Notice of Consent.

Adequate disclosure includes enough information to identify the gift and support its value. The IRS generally has 3 years after the return is filed to assess gift tax on an adequately disclosed gift. If no return is filed, or a gift is not adequately disclosed, tax on it can be assessed at any time. Form 709 instructions, Adequate Disclosure; 26 USC 6501.

I sent large gifts for years and never filed Form 709: what now?

Reconstruct gifts by recipient and calendar year, using each year's exclusion and rules. A return with no tax payable can still be required. Form 709 instructions.

Each year's return carries earlier taxable gifts forward, so missing years are usually reconstructed from the earliest year. Recover historic share valuations and purchase records; today's values cannot substitute for gift-date values.

The late-filing penalty is 5% of the tax required to be shown on the return, less any paid on time, for each month or part of a month, up to 25%; late payment adds 0.5% a month, up to 25%, unless reasonable cause applies. A late return that shows no gift tax generally has nothing for those percentages to apply to, but the IRS's time limit to assess does not start until a return is filed. The instructions also list penalties for willful failure to file and for valuation understatements. 26 USC 6651(a); Form 709 penalty instructions.

If the IRS issues a penalty notice, the instructions say to respond with an explanation rather than attach one to the original Form 709. Several missed years, uncertain values or prior gifts near the available exclusion are situations where a cross-border tax review may help, with the transfer history and any IRS correspondence.

Example

Illustrative amounts in US dollars. A US citizen living in the US has made no previous taxable gifts and makes the following transfers in one calendar year.

The donor files Form 709 listing all of the gifts to the mother (US$36,000, of which US$17,000 is taxable) and to the brother (US$50,000, of which US$31,000 is taxable). Assuming the donor has the full basic exclusion available, these US$48,000 of taxable gifts use part of it without a gift-tax payment. The qualifying tuition payment is excluded from reporting.

If the donor instead sends the US$20,000 tuition money to the daughter's account, the daughter's cash gifts total US$25,000. That is US$6,000 more than her annual exclusion, so the donor lists all US$25,000 of gifts to her on Form 709, with US$19,000 excluded and US$6,000 taxable. The payment route changes the result even if the daughter spends all the tuition money at the university.

If the donor's US-citizen spouse consents to split the gifts, each spouse is treated as giving half: US$18,000 to the mother (within each exclusion) and US$25,000 to the brother (US$6,000 above each exclusion). Taxable gifts fall from US$48,000 to US$12,000, and both spouses file because the brother's gift is more than twice the exclusion.

If the donor lived in Canada and bought the shares there, Canada would also treat the gift as a sale at market value, so US$40,000 of gain (before converting to Canadian dollars) would be reported on the Canadian return. A donor who became resident in Canada after buying them would start from their market value on that day.

Different for you?

• Family abroad gives or leaves you money: recipient-side reporting, including Form 3520, is covered in Gifts and inheritances from abroad.
• You are giving a Canadian home or adding a relative to title: see Transferring property to family.
• You live in Connecticut: the state requires its own gift return, Form CT-706/709, when you have taxable gifts, even if no state tax is due. See Connecticut DRS: Estate and gift tax information.
• You have missed gift returns, private shares, a family loan, or a gift taxable in both countries: use cross-border tax review with your transfer records, historic costs and values, prior returns and notices.