The Internal Revenue Service and the U.S.
Department of the Treasury on Monday said contributions to Trump Accounts will not trigger annual gift tax reporting requirements, removing a potential paperwork burden for families ahead of the program’s July 4 rollout.
Under new safe harbor guidance, parents, guardians, grandparents and other contributors can add up to $5,000 per year in after-tax dollars to a Trump Account without needing to file a gift tax return solely because of those contributions.Trump Accounts, also known as 530A accounts, are tax-deferred investment accounts for children that allow eligible beneficiaries to build long-term savings through government and private contributions.
IRS Chief Executive Officer Frank Bisignano said the relief addresses concerns from taxpayers who worried contributions could trigger gift tax reporting rules.
Read Also: Kevin O'Leary's Says 'Without Sales, Nothing Else Matters,' Urges Entrepreneurs To Prove Real Demand Gift Tax Concern Removed The reporting issue had emerged as a potential friction point because gift tax rules typically distinguish between "present interest" gifts, which recipients can access immediately, and "future interest" gifts, which often carry additional reporting requirements.
