Accurate preparation of Form 3520 by a Washington-licensed CPA with cross-border tax experience. We help U.S. taxpayers report foreign gifts, inheritances, and foreign trust transactions correctly — and avoid the steep penalties that can come with late or incomplete filing.
Book a ConsultationForm 3520, "Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts," is an information return that U.S. persons must file with the IRS to report certain transactions involving foreign trusts and the receipt of large gifts or bequests from foreign persons. It is not a tax return — no tax is calculated on the form itself — but it is a critical disclosure requirement with severe penalties for noncompliance.
Form 3520 covers four broad categories: (1) creation of or transfers to a foreign trust by a U.S. person, (2) distributions from a foreign trust to a U.S. beneficiary, (3) receipt of gifts or bequests from a non-resident alien individual or foreign estate exceeding $100,000, and (4) receipt of gifts from foreign corporations or partnerships exceeding certain thresholds. Each category is reported on a different part of the form, and the filing deadline and IRS submission address vary depending on which part applies.
Many taxpayers are unaware that receiving a large gift from a foreign relative triggers a U.S. reporting obligation — even though the gift itself is not taxable income. At TaxWise LLC, we help you determine whether a filing requirement exists, prepare the form accurately, and ensure it is filed on time. Our CPA has direct experience with cross-border tax matters, including U.S.-China family gift and trust structures, foreign inheritances from estate administrations abroad, and multi-jurisdictional reporting.
U.S. persons who receive gifts or bequests from a non-resident alien individual or foreign estate totaling more than $100,000 in a single tax year. This commonly affects immigrants and first-generation Americans receiving family support from abroad.
U.S. beneficiaries who inherit assets from a foreign estate. Even though the inheritance may not be subject to U.S. income tax, the receipt itself must generally be reported on Form 3520 if it exceeds the $100,000 threshold.
U.S. persons who receive distributions from a foreign trust during the tax year. This includes direct distributions, loans from foreign trusts, and uncompensated use of trust property. Separate reporting applies to grantor vs. non-grantor trusts.
U.S. persons who create a foreign trust, transfer money or property to a foreign trust, or cause a trust to become a foreign trust. Even indirect transfers and constructive ownership situations may trigger a filing requirement.
New U.S. residents and dual citizens who maintain financial ties to their home country. Family gifts, dowries, wedding contributions, and help with a home down payment from foreign relatives are common triggers.
Taxpayers who recently discovered they should have filed Form 3520 in a prior year. The IRS takes this omission seriously, but there are procedures — including reasonable cause statements and voluntary disclosure options — to bring past years into compliance.
These real-world situations commonly trigger a Form 3520 filing obligation. If any of these apply to you, professional guidance is recommended.
A common scenario for first-generation immigrants. Parents living abroad transfer funds for a home purchase, education, or family support. Even if no tax is owed, the report must be filed — and the threshold applies per foreign person, not per gift.
Whether you inherited cash, real estate, or securities from a foreign estate, the total value received in a tax year above $100,000 is reportable. You may also have ongoing FBAR and Form 8938 obligations for the inherited foreign accounts.
Many families abroad establish trusts for estate planning or wealth transfer. If you are a U.S. beneficiary and receive a distribution, the trust and the distribution are reportable. The trust itself may also need to file Form 3520-A if it has a U.S. owner.
If you were involved in creating or funding a foreign trust while you were a U.S. person, you generally must report it on Form 3520 in the year of creation and in subsequent years for any activity. This is separate from the ongoing Form 3520-A obligation for the trust.
Gifts from foreign corporations or partnerships exceeding certain annual thresholds ($17,339 for 2024) must also be reported. This can arise in family business structures where a foreign company makes distributions characterized as gifts.
The thresholds are based on the aggregate of all gifts from a single foreign person during the tax year. Multiple transfers that individually are below the threshold but collectively exceed it must still be reported.
Having these documents helps us prepare your Form 3520 accurately. The specific documents needed depend on which part of the form applies to your situation.
These two forms are often confused. Both relate to foreign trusts, but they serve different purposes and are filed by different parties.
| Form 3520 | Form 3520-A | |
|---|---|---|
| Filed By | U.S. person who receives gifts, inheritances, or trust distributions; or who creates/transfers to a foreign trust | The foreign trust itself (if it has a U.S. owner) |
| Purpose | Reports transactions with foreign trusts and receipt of large foreign gifts | Annual information return of the foreign trust's income, deductions, and distributions |
| Due Date | April 15 (or the 15th day of the 4th month after the trust's tax year end for trust-related parts), with extensions available | March 15 (or the 15th day of the 3rd month after the trust's tax year end), with extensions available |
| Covers | Foreign gifts, foreign inheritances, trust distributions, trust creation, trust transfers, and loans to/from foreign trusts | The foreign trust's annual financial activity and the U.S. owner's share of trust income |
| Interaction | A U.S. person who is the owner of a foreign trust must ensure the trust files Form 3520-A AND must also file their own Form 3520 reporting their ownership and any transactions. Both forms are generally required, not one or the other. | |
We review your specific situation — the type and amount of foreign gifts, inheritances, or trust transactions — and determine which parts of Form 3520 apply, whether Form 3520-A is also required, and what the filing deadline is. Not every foreign transaction triggers a requirement; we apply the thresholds and rules carefully to avoid unnecessary filings.
We tell you exactly what we need and help you assemble the documentation. We then prepare Form 3520 (and Form 3520-A, if applicable), ensuring all required schedules are complete and consistent with related filings such as your Form 1040, FBAR, and Form 8938.
Unlike most tax forms, Form 3520 is not filed with your tax return — it must be mailed to a specific IRS office depending on which part applies. We handle the mailing and ensure delivery tracking. The form cannot be e-filed.
If you missed a prior-year filing, we help you come into compliance. This may involve preparing the delinquent form with a reasonable cause statement explaining why the filing was late. Where appropriate, we discuss IRS voluntary disclosure options and the Delinquent International Information Return Submission procedures.
Schedule a consultation with a CPA experienced in foreign gift, trust, and inheritance reporting. We'll determine your filing obligations and prepare your Form 3520 correctly.
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IRS Circular 230 Disclosure: Any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding federal tax penalties or promoting, marketing, or recommending any transaction or matter addressed herein.
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