Trump Accounts and the Gift Tax Trap

A new safe harbor procedure spares most, but not all, taxpayers from filing Form 709

With nearly six million §530A Trump accounts already opened, practitioners are starting to field a question with an unfortunate answer: is a contribution to a child’s Trump account a reportable gift on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return?

Gift of Future Interest

The annual gift exclusion under §2503(b) applies only to a gift of present interest, which is an unrestricted right to the immediate use, possession, or enjoyment of property. See Treas. Reg. §25.2503-3(b).

Because the Trump account beneficiary generally cannot access the funds during the growth period, any contribution to a Trump account is likely a gift of future interest that does not qualify for the annual gift tax exclusion, regardless of the contribution amount. See §2503(b)(1) and Treas. Reg. §25.2503-3(a).

To avoid the filing of millions of additional Form 709s, the IRS provided filing relief in Rev. Proc. 2026-25 — but the details matter, because Trump account contributions will have to be reported on Form 709 if the IRS’s safe harbor is not met.

Form 709 Filing Relief Requirements

If the safe harbor applies for a calendar year, each Trump account contribution is treated as a completed gift of present interest to the account beneficiary and is eligible for the annual exclusion. The taxpayer must meet five requirements:

1. The donor is an individual,

2. The only taxable gifts the donor makes during the year are cash contributions to one or more Trump accounts, each made before the year the beneficiary turns 18,

3. The donor’s total gifts to each account beneficiary, including the Trump account contribution, do not exceed the annual gift tax exclusion amount,

4. The contributions generate no gift or generation-skipping transfer (GST) tax after applying the donor’s remaining applicable credit amount and GST exemption, and

5. Disregarding the Trump account contributions, no gift tax return is required, and no gift tax return is otherwise filed by or on behalf of the taxpayer for the tax year.

If the safe harbor is not met, any contribution to a Trump account is treated as a gift of future interest and must be reported on Form 709.

Example 1: No Gift Tax Return Required

In tax year 2026, Gail has two grandchildren, Henry and Audrey. She contributes $5,000 to each of their Trump accounts and makes an additional $8,000 cash gift to Henry. Her total 2026 gifts are $13,000 to Henry and $5,000 to Audrey, each being under the $19,000 exclusion amount for tax year 2026.

Gail makes no other gifts and files no Form 709 for any other purpose. Because Gail meets the safe harbor, her contributions to the Trump accounts are treated as gifts of present interest and do not have to be reported on Form 709.

Example 2: Gift Tax Return Required

In tax year 2026, Lysa has two grandchildren, Quinn and Nancy. She contributes $5,000 to each of their Trump accounts and makes an additional $8,000 cash gift to Nancy. In addition, she makes a $30,000 cash gift to her adult son, Noah. Her total 2026 gifts are $13,000 to Nancy, $5,000 to Quinn, and $30,000 to Noah.

Lysa must file Form 709 to report Noah’s gift since it exceeds the $19,000 exclusion amount for tax year 2026. Therefore, Lysa does not meet the safe harbor, and the $5,000 contributions to the Trump accounts for Quinn and Nancy are treated as gifts of future interest and must be reported on Form 709.

Join the Conversation

If you are a paid subscriber, you can talk about this topic in the comments section. Please keep the discussion related to this edition’s topic.