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VideoThe Tax Navigator – IRS Clarifies Gift Tax Rules for Trump Accounts
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The IRS recently issued Revenue Procedure 2026-25, providing gift tax report relief for certain contributions to Trump Accounts. In this episode of The Tax Navigator, Sean Muller explains the original concerns surrounding the treatment of Trump account contributions as future-interest gifts, how the new guidance affects gift tax reporting requirements and the annual gift tax exclusion, and the conditions taxpayers must meet to qualify for relief. He also walks through examples from the guidance and highlights key planning considerations for individuals contributing to Trump accounts on behalf of children.
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Detailed Description of The Tax Navigator – IRS Clarifies Gift Tax Rules for Trump Accounts
00:00:00
Sean: Potential good news for taxpayers. On Monday, June 29, the IRS released Revenue Procedure 2026-25 related to Trump accounts.
00:00:13
Sean: If you listened in the past or you listened to the webinar we had last week, we talked about the concern with Trump accounts being a gift of a future interest because your children can’t access it [the funds] until age 18.
00:00:25
Sean: So, it’s a gift of a future interest, which does not qualify for the annual gift tax exclusion. What we talked about was the fact that as a future interest, it would have to be a gift tax return that has to be filed each year. And the annual gift tax exclusion now is $19,000.
00:00:40
Sean: So, for example, if you put $5,000 in a Trump account for your child, you’d have to file a gift tax return and use that part of your lifetime exemption for the $5,000, even though you’re potentially below $19,000.
00:00:51
Sean: So, it’s going to cause a mess. Unlike the 529 plans, which are codified in law as not being future interests, the Trump accounts did not have that language, so we were concerned about it.
00:01:01
Sean: Well, without a law change, the IRS and Treasury realized, “Wait, we’re going to have a file a lot of gift tax returns,” because I think there have been six million Trump accounts set up. So, you’re going to have to give file tax returns for all these different taxpayers.
00:01:17
Sean: They came out with a Revenue Procedure today that allows us to not file a gift tax return if you meet specific exclusions.
00:01:25
Sean: One, you have to be an individual. Okay, no big deal.
00:01:28
Sean: Two, you have to make only cash contributions. So no stock, no vehicles, nothing like that to your kids or anybody else.
00:01:37
Sean: You have to have some lifetime exclusion left for the gift, and then you cannot exclude the annual gift tax exclusion, including the Trump accounts.
00:01:50
Sean: The example that’s in there is you have child A and child B. You put $5,000 in both accounts, and you give $13,000 to child B. You have given a total of $23,000. $5,000 to child A and $18,000 to child B.
00:02:08
Sean: Well, the $18,000 is less than the $19,000 annual gift tax exclusion. In that case, neither Trump account contribution is taxable.
00:02:16
Sean: Let’s look at example two, though. You give $5,000 to child A and $5,000 to child B, and you contribute $14,500 to child B as a gift.
00:02:26
Sean: Now you’ve gone over the $19,000; you’re at $19,500 to child B. Now you’ve excluded the annual gift tax exclusion, and now you no longer have this present interest.
00:02:37
Sean: Now you have a taxable gift for both Trump accounts: for the $5,000 to child A and $5,000 to child B, even though you only gave $5,000 to child A.
00:02:45
Sean: They need the IRS or Treasury to come out and codify the changes to make it not a future interest, but this revenue procedure did come out to try to give some relief to taxpayers that aren’t giving a lot of gifts to their kids.
00:02:58
Sean: So welcome news, but there is some fine print you have to deal with.
This episode of The Tax Navigator was recorded prior to publication. Some references or updates discussed may reflect information current as of the recording date.
