Compliance
Staying Compliant with the Trump Account Safe Harbor under Working Families Tax Cuts
Recent IRS Revenue Procedure 2026-25 offers relief from gift tax reporting for contributions to Trump Accounts — here’s exactly how to qualify and avoid surprises.
By NomadicTax Research Team • 5-8 min read • July 3, 2026
## What Is a Trump Account?
Trump Accounts are savings accounts designed for children (U.S. citizens born between 2025–2028), allowing certain **authorized individuals** like parents or guardians to open an account using IRS form **4547**. These accounts are tied to new benefits under the **Working Families Tax Cuts** legislation. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-safe-harbor-for-certain-contributions-to-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
## Safe Harbor Under Revenue Procedure 2026-25
Issued **June 29, 2026**, the IRS’s Revenue Procedure 2026-25 establishes **safe harbor rules** so that contributions to Trump Accounts **won’t trigger gift tax reporting**, provided specific requirements are met. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-provide-safe-harbor-for-certain-contributions-to-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
### Key criteria include:
- The Trump Account must be properly elected via **Form 4547** before the calendar year in which the child turns 18.
- Contributors must follow the program rules set forth under Working Families Tax Cuts.
- For children born in 2025–2028, there’s a pilot $1,000 contribution election available at account setup.
If these requirements are satisfied, donors avoid needing to file gift tax returns for those contributions in that year.
## Practical Guidance & Steps
- **Complete Form 4547 timely**: Election must be made before the child’s 18th birth-year calendar begins. Missing deadlines disqualifies safe harbor.
- **Confirm child’s citizenship and birth year**: Only U.S. citizens born in 2025–2028 qualify.
- **Check the pilot contribution**: If eligible, elect the $1,000 contribution option during setup.
- **Record keep every contribution**: Even under safe harbor, well-documented sources will help in case of any IRS inquiry.
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## Example
Parent A opens a Trump Account for their child, born in **2026**, and completes Form 4547 in **2026**. They elect the $1,000 pilot contribution. Over the year, they contribute additional funds. Under Revenue Procedure 2026-25, the $1,000 pilot and contributions that follow rules won't require gift tax reporting if the safe harbor conditions are met.
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## Compliance Pitfalls to Avoid
- Electing **after** the required deadline. The election MUST be before the calendar year the child turns 18.
- Using funds outside the permitted contribution schedule. Non-qualified contributions may break safe harbor.
- Failing to use Form 4547 properly or misreporting child’s birth year.
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## Why This Matters
Without safe harbor, contributions to third-party accounts for minors can count as gifts, possibly exceeding the annual exclusion amount and triggering **Form 709** gift tax filing. Safe harbor simplifies this for families meeting the criteria.
**Takeaway:** If you plan to contribute to a Trump Account for an eligible child, ensure you satisfy all conditions under Revenue Procedure 2026-25 — timely election, documentation, and eligible status — to avoid unnecessary gift tax obligations.