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an individual to a person or institution that

4. As a result of the refusal, the

payable either to the minor's estate or to

provided medical care for the individual.

interest must pass without any direction

whomever the minor may appoint under a

The payment must be to the care provider.

from the disclaimant to either:

general power of appointment.

The medical care must meet the

a. The spouse of the decedent, or

The gift of a present interest to more

requirements of section 213(d) (definition

b. A person other than the

than one donee as joint tenants qualifies

of medical care for income tax deduction

disclaimant.

for the annual exclusion for each donee.

purposes). Medical care includes

5. The refusal must be irrevocable

expenses incurred for the diagnosis, cure,

Nonresidents not Citizens of

and unqualified.

mitigation, treatment, or prevention of

the United States

disease, or for the purpose of affecting

The 9-month period for making the

Nonresidents not citizens of the United

any structure or function of the body, or for

disclaimer generally is determined

States are subject to gift and GST taxes

transportation primarily for and essential to

separately for each taxable transfer. For

for gifts of tangible property situated in the

medical care. Medical care also includes

gifts, the period begins on the date the

United States. A person is considered a

amounts paid for medical insurance on

transfer is a completed transfer for gift tax

nonresident not a citizen of the United

behalf of any individual.

purposes.

States if he or she, at the time the gift is

The medical exclusion does not apply

made, (1) was not a citizen of the United

Annual Exclusion

to amounts paid for medical care that are

States and did not reside there, or (2) was

reimbursed by the donee's insurance. If

The first $14,000 of gifts of present

domiciled in a United States possession

payment for a medical expense is

interest to each donee during the calendar

and acquired citizenship solely by reason

reimbursed by the donee's insurance

year is subtracted from total gifts in

of birth or residence in the possession.

company, your payment for that expense,

figuring the amount of taxable gifts. For a

Under certain circumstances, they also

to the extent of the reimbursed amount, is

gift in trust, each beneficiary of the trust is

are subject to gift and GST taxes for gifts

not eligible for the medical exclusion and

treated as a separate donee for purposes

of intangible property. See section

you are considered to have made a gift to

of the annual exclusion.

2501(a).

the donee of the reimbursed amount.

All of the gifts made during the

If you are a nonresident not a citizen of

To the extent that the payment was for

calendar year to a donee are fully

the United States who made a gift subject

something other than medical care, it is a

excluded under the annual exclusion if

to gift tax, you must file a gift tax return

gift to the individual on whose behalf the

they are all gifts of present interest and

when any of the following apply.

payment was made and may be offset by

they total $14,000 or less.

You gave any gifts of future interests.

the annual exclusion if it is otherwise

Your gifts of present interests to any

available.

Note. For gifts made to spouses who are

donee other than your spouse total more

not U.S. citizens, the annual exclusion has

The medical and educational

than $14,000.

been increased to $149,000, provided the

exclusions are allowed without regard to

Your outright gifts to your spouse who is

additional (above the $14,000 annual

the relationship between you and the

not a U.S. citizen total more than

exclusion) $135,000 gift would otherwise

donee. For examples illustrating these

$149,000.

qualify for the gift tax marital deduction (as

exclusions, see Regulations section

Transfers Subject to the GST

described in the Schedule A, Part 4, line 4

25.2503-6(c).

instructions, later).

Tax

Qualified disclaimers. A donee's refusal

A gift of a future interest cannot be

to accept a gift is called a disclaimer. If a

You must report on Form 709 the GST tax

excluded under the annual exclusion.

person makes a qualified disclaimer of any

imposed on inter vivos direct skips. An

interest in property, the property will be

inter vivos direct skip is a transfer made

A gift is considered a present interest if

treated as if it had never been transferred

during the donor's lifetime that is:

the donee has all immediate rights to the

to that person. Accordingly, the

Subject to the gift tax,

use, possession, and enjoyment of the

disclaimant is not regarded as making a

Of an interest in property, and

property or income from the property.

gift to the person who receives the

Made to a skip person. (See Gifts

A gift is considered a future interest if

property because of the qualified

Subject to Both Gift and GST Taxes,

the donee's rights to the use, possession,

disclaimer.

later.)

and enjoyment of the property or income

Requirements. To be a qualified

A transfer is subject to the gift tax if it is

from the property will not begin until some

disclaimer, a refusal to accept an interest

required to be reported on Schedule A of

future date. Future interests include

in property must meet the following

Form 709 under the rules contained in the

reversions, remainders, and other similar

conditions.

gift tax portions of these instructions,

interests or estates.

including the split gift rules. Therefore,

1. The refusal must be in writing.

A contribution to a QTP on behalf of a

transfers made to political organizations,

2. The refusal must be received by the

designated beneficiary is considered a gift

transfers made to certain exempt

donor, the legal representative of the

of a present interest.

organizations, transfers that qualify for the

donor, the holder of the legal title to the

medical or educational exclusions,

A gift to a minor is considered a

property disclaimed, or the person in

transfers that are fully excluded under the

present interest if all of the following

possession of the property within 9

annual exclusion, and most transfers

conditions are met.

months after the later of:

made to your spouse are not subject to the

1. Both the property and its income

a. The day the transfer creating the

GST tax.

may be expended by, or for the benefit of,

interest is made, or

the minor before the minor reaches age

Transfers subject to the GST tax are

b. The day the disclaimant reaches

21.

described in further detail in the

age 21.

instructions.

2. All remaining property and its

3. The disclaimant must not have

income must pass to the minor on the

Certain transfers, particularly

accepted the interest or any of its benefits.

minor's 21st birthday.

transfers to a trust, that are not

3. If the minor dies before the age of

subject to gift tax and are

CAUTION

21, the property and its income will be

therefore not subject to the GST tax on

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Instructions For Form 709 - United States Gift (And Generation-Skipping Transfer) Tax Return - 2017 Page 3

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