Schedule B is used to report taxable gifts made in prior years when the donor has previously filed Form 709. This schedule ensures that lifetime gift totals and previously applied credits are carried forward correctly into the current year’s gift tax computation.
When Schedule B is required
Schedule B must be completed if the donor answered “Yes” to Part I, line 18a of Form 709, indicating that a Form 709 (or Form 709-A) was filed for any earlier year. If no prior gift tax returns were filed, Schedule B is not completed.
Purpose of Schedule B
The purpose of Schedule B is to maintain a cumulative record of taxable gifts. Gift tax is computed on a lifetime basis, and Schedule B ensures that prior taxable gifts are included when calculating the current year’s applicable credit and remaining exclusion amounts.
Information reported on Schedule B
Schedule B lists each prior reporting period, the Internal Revenue Service office where the return was filed, and the amounts of taxable gifts and credits previously applied. This information is used to recompute the cumulative gift tax position under current law.
How Schedule B affects tax computation
Amounts from Schedule B are carried to Part II of the main return, where prior taxable gifts are combined with current-year taxable gifts from Schedule A. This cumulative approach determines the applicable tax brackets and credit calculations used in the current year.
Interaction with other schedules
Schedule B relies on taxable gift amounts determined in Schedule A and directly affects the applicable credit calculation in Part II. It also interacts with Schedule C when deceased spousal unused exclusion amounts have been applied in prior years.
Why accurate prior-period reporting matters
Errors or omissions in Schedule B can distort lifetime exclusion tracking and result in incorrect tax calculations. Because gift tax is cumulative, accurate reporting of prior-period gifts is essential even when no tax was due in earlier years.
This page explains the role of Schedule B in Form 709. For an overview of how all schedules connect, see Form 709 structure explained. For current-year gift reporting, see Schedule A explained. For official schedule layout and authoritative instructions, refer to the IRS Form 709 official document overview.