Did you receive a foreign gift or an inheritance?

If you received foreign gifts of money or other property, you may need to report these gifts to the IRS.

Form 3520 is an information return, not a tax return, because foreign gifts are not subject to income tax. However, there are penalties for failure to file Form 3520 when it is required.

In general, a foreign gift is money or other property received by a U.S. person from a foreign person that the recipient treats as a gift or bequest and excludes from gross income. A “foreign person” is a nonresident alien individual or foreign corporation, partnership or estate.

Include on Form 3520:
1. Gifts or bequests valued at more than $100,000 from a nonresident alien individual or foreign estate.

2. Gifts valued at more than $13,258 (adjusted annually for inflation) from foreign corporations or foreign partnerships.

You must aggregate gifts received from related parties. For example, if you receive $60,000 from nonresident alien A and $50,000 from nonresident alien B, and you know or have reason to know they are related, you must report the gifts because the total is more than $100,000.

The due date for filing Form 3520 is the same as the due date for filing your annual income tax return, including extensions.

This post is intended to provide general information. It is not a comprehensive analysis of the IRS provisions and should not be relied upon as legal or tax advice.