Babies will get their $1,000 'Trump accounts' in 2026 – along with tax complications

Core Insights - The introduction of Trump accounts aims to promote savings for children born between 2025 and 2028, with the government seeding each account with $1,000 [2] - Contributions to these accounts will not qualify for the gift tax annual exclusion, necessitating the filing of Form 709 for each contribution [3][5] - The requirement to file Form 709 presents a significant tax compliance issue, as it is not readily available on common tax platforms [4][3] Group 1: Trump Accounts Overview - Trump accounts are designed to help families save for future expenses, with a government contribution of $1,000 for eligible newborns [2] - Parents and others can contribute up to $5,000 annually, with employers allowed to contribute half of that amount until the child turns 18 [2] Group 2: Tax Compliance Issues - Contributions to Trump accounts are not considered gifts of "present interest," which is why they do not qualify for the annual gift tax exclusion of $19,000 per person [5] - The requirement to file Form 709 for contributions, regardless of the amount, creates a compliance burden for taxpayers [3][4] - The IRS can penalize taxpayers for failing to file Form 709, even if no tax is owed, which poses a risk during audits [7] Group 3: Filing Form 709 - Form 709 can be filed by mailing a completed form to the IRS or electronically through authorized providers [8] - Utilizing an accountant for filing may incur costs that exceed the contribution amount, highlighting the potential financial burden of compliance [8]