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IRS Expands Trump Account Access and Eases Gift Tax Reporting Requirements

IRS Expands Trump Account Access and Eases Gift Tax Reporting Requirements

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    The IRS has prioritized guidance on Trump accounts with two recent actions that facilitate participation in the program. In addition to allowing taxpayers to view and submit Trump Account elections in their IRS accounts, the IRS dropped the gift tax return filing requirement for most taxpayers making contributions.

    New IRS Individual Account Features for Trump Accounts

    Taxpayers can now view and submit Trump Account elections through their IRS Individual Account. They can access their Form 4547, Trump Account Election(s), and see any required next steps. Taxpayers can also submit the form electronically through this portal. This “real-time visibility” into the Trump Account election process will improve accuracy, speed up processing times, and reduce delays associated with paper forms, according to the IRS.

    The program launched on July 4th, so the online election process is live. Click here for more information on how the accounts work and how to set one up. You also can access the government’s information page on Trump Accounts at trumpaccounts.gov.

    No Gift Tax Reporting  for Trump Accounts

    To further encourage participation in the program, the IRS has taken the unusual step of relieving many taxpayers of the requirement to file a gift tax return for their contributions to Trump Accounts. In general, gift tax returns are required if a taxpayer gives more $19,000 to a single recipient in a year. Even if a gift is under $19,000, gifts of future interests must be reported on a gift tax return. Gifts in excess of $19,000 per person count against a taxpayer’s lifetime estate and gift tax exemption, currently set at $15 million.

    Revenue Procedure 2026-25 provides a “safe harbor” exempting taxpayers from filing gift tax returns for Trump Account contributions. The safe harbor provides that contributions to Trump accounts will be treated as completed gifts that are not gifts of future interests in property which require gift tax returns. Under the new rule, taxpayers do not have to file a gift tax return if these requirements are met:

    • The taxpayer is an individual.
    • The only potentially taxable gifts made by the taxpayer during the calendar year are cash contributions to Trump accounts, made before the year in which the account beneficiary turns 18.
    • The taxpayer’s total gifts to each account beneficiary, including contributions to a Trump account, do not exceed the annual exclusion amount, which is $19,000 for 2026.
    • Trump account contributions do not generate a gift or generation-skipping tax (GST) tax liability, after application of the taxpayer’s remaining lifetime credit amount.
    • Disregarding Trump Account gifts, no gift tax return is otherwise required to be filed, and no gift tax return is filed, for that calendar year for any other purpose.

    In granting the relief, the IRS noted that “the vast majority of individual donors to Trump accounts are unlikely to ever owe federal gift, estate or GST tax due to the lifetime basic exclusion amount and GST exemption of $15,000,000.” IRS Chief Executive Officer Frank J. Bisignano further commented that, “The relief granted will reduce the potential burden placed on friends and family who want to put money into a Trump account.”

    Important Observations

    Meanwhile, the AICPA in March offered interesting insights on how Trump Accounts differ from other investment vehicles. The group observed that Trump Accounts are easy to set up and administer but are less flexible than other child savings plans, such as 529 education plans, ABLE accounts, and Roth IRAs.

    For one thing, Trump Accounts have investment restrictions and can only be invested in mutual funds or exchange-traded funds that track the S&P 500 or another index of “primarily American equities.” These restrictions do not apply to other accounts. However, Trump Accounts have the added benefit of a $1,000 contribution from the government for children born in calendar years 2025, 2026, 2027, or 2028. The 529 plans allow tax-free qualified distributions while Roth IRAs have earned income requirements.

    The point is that taxpayers should carefully evaluate the benefits and burdens of each savings option when they are deciding how to invest for the future of their children, grandchildren or other beneficiaries. Contact your Frazier & Deeter tax advisor to have this conversation. 

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