IRS Form 3520 for Foreign Gifts and Inheritances: What U.S. Recipients Should Preserve

Review the primary IRS Form 3520 page.

Form 3520 is an information return

A U.S. recipient generally must report gifts or bequests from a nonresident individual or foreign estate on Part IV of Form 3520 when the relevant yearly total exceeds $100,000. Related donors must be considered together. Purported gifts from foreign corporations or partnerships use a different, much lower annual threshold. A foreign-trust distribution follows a different part of the form. Classify the sender and transfer before deciding whether a wire or inheritance needs reporting.

Form 3520 is an information return: A reporting obligation is not itself a conclusion that the receipt is taxable income. The IRS foreign-gift guidance describes gifts or bequests the recipient treats as excluded from gross income. Compensation, a loan, a trust distribution and a gift can require different treatment even when the bank describes each as an overseas transfer.

The Form 3520 instructions distinguish reporting transfers to and ownership of foreign trusts from receiving distributions and large foreign gifts. This guide focuses on the recipient’s gift or inheritance screening. Preserve the whole trust instrument or estate record when a trust may be involved; the ordinary gift threshold cannot safely be applied to a payment merely because a relative calls it an inheritance.

Classify the transfer before applying thresholds

First identify who transferred the property and in what legal capacity. An individual donor, foreign estate, corporation, partnership, and foreign trust can trigger different questions. Determine whether the transfer was a gift, inheritance, distribution, loan, payment for services, or return of the recipient’s own property. Labels on a bank memo are not enough; agreements, estate papers, trust instruments, and relationship evidence may control the classification.

Nonresident individuals and foreign estates. The trigger is more than $100,000 during the taxable year, not $100,000 per wire. Aggregate receipts from persons you know, or have reason to know, are related, including nominee or intermediary arrangements. Once the threshold is exceeded, separately identify gifts or bequests above $5,000 as the instructions require. If none individually exceeds $5,000, the instructions direct the filer to enter “No gifts or bequests exceed $5,000” in column (b) of the first line instead of completing columns (a) through (c).

The instructions’ example combines a $75,000 gift from one nonresident individual with $40,000 from another whom the recipient knows is related to the first. The $115,000 combined amount crosses the threshold even though neither gift does alone. This is why the donor relationship belongs in the file beside the bank amounts. Do not divide one source’s transfers into separate receipts to avoid the yearly test. See the instructions for Part IV, line 54.

Foreign corporations and partnerships. For 2026, the IRS lists a $20,573 aggregate threshold for purported gifts from foreign corporations or partnerships and related foreign persons; the 2025 amount was $20,116. The amount changes annually, so use the transfer year, not the year you happen to review the file. Once this threshold is exceeded, the IRS requires identification of each gift and donor. It may recharacterize a purported entity gift; proof of who ultimately supplied the property therefore matters independently of the amount. See the IRS reporting requirements and Part IV, lines 55–56.

Trusts and special transfers. A reportable distribution from a foreign trust must be reported in Part III rather than as a gift in Part IV, including when an intermediary acts for the trust. A domestic trust treated as owned by a foreign person is different: Its reportable distribution to a U.S. person is reported as a foreign gift in Part IV, not as a foreign-trust distribution in Part III. The trust’s legal classification and owner therefore matter independently of where its bank account is located. The instructions also exclude qualifying tuition or medical payments made on the recipient’s behalf from the gift definition. Gifts or bequests from a covered expatriate can trigger a separate transfer tax on the U.S. recipient under section 2801; Form 708 addresses that tax, not merely foreign-gift information reporting. Tell the reviewer about these facts rather than assuming that staying below $100,000 resolves them.

Preserve the money and property trail

Preserve the transfer trail from origin to receipt. Keep wire instructions, bank statements, currency amounts, exchange-rate support, appraisal or market-value records, title documents, correspondence with the donor or executor, and proof of the date control passed. For multiple transfers, use a ledger that aggregates related receipts by source and year. Redact account credentials in working copies, but preserve complete originals securely.

Use the ledger to answer a specific question: Which receipts belong together for this donor category and tax year? Keep donor identity and relationship evidence, the date and value of each receipt, and the document showing whether the sender acted for an estate, entity or trust. Our tax-services page explains the firm’s representation; the legal screening still turns on these transfer facts.

Coordinate Form 3520 with other filings

File Form 3520 separately from the income-tax return, following its own instructions. The current instructions direct mailing to Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409; verify that destination against the instructions when filing. Ordinarily it is due on the fifteenth day of the fourth month after the recipient’s tax year ends—generally April 15 for a calendar-year individual. For a U.S. citizen or resident, the June 15 rule requires either both living outside the United States and Puerto Rico and having a place of business or post of duty outside those places, or military or naval service on duty outside those places. Include the required statement with Form 3520 establishing the qualifying condition. Merely traveling abroad is not the same showing.

A granted income-tax filing extension can extend Form 3520, but generally no later than the fifteenth day of the tenth month after year-end—October 15 for a calendar-year filer. Check Box 1k and enter the form number of the income-tax return being extended—for example, “1040” when Form 4868 extended that return. Do not enter “4868” as the underlying return number. An additional discretionary income-tax extension to December 15 does not extend Form 3520 that far. The instructions also move a due date falling on a weekend or legal holiday to the next qualifying day. Preserve the extension and mailing proof, not simply a calendar note saying the tax return was extended.

For a reportable Part IV foreign gift, the instructions describe a penalty of 5% of the gift amount for each month of failure, capped at 25%, with a reasonable-cause and no-willful-neglect exception. That is different from the section 6677 foreign-trust reporting penalties for Parts I–III. For a failure to timely report a foreign gift under section 6039F, the IRS may also determine the receipt’s income-tax consequences; the percentage penalty is not the only possible consequence. If a filing was missed or an IRS notice arrived, bring the complete notice, receipt chronology and actual explanation of the delay for individual review; a gift letter does not itself resolve the penalty.

If foreign-trust events in Parts I–III are also involved, incomplete reporting raises a separate assessment-period problem. The instructions state that the relevant period will not expire before three years after the required information is reported. Do not treat that rule as a blanket statement that every tax year of every Part IV gift recipient remains open indefinitely. Identify the particular event, required information and applicable assessment rule.

Form 3520 may coexist with income-tax reporting, FBAR, Form 8938 and other filings. Our FBAR and Form 8938 comparison addresses foreign accounts and assets, not whether a transfer is a reportable foreign gift. Match each obligation to the facts it tests rather than treating one filed form as proof that the others were unnecessary.

For a focused review, assemble:

• donor, decedent, estate, entity, or trust identity and country
• recipient residency and U.S. tax status for the year
• transfer dates, amounts, currency, and valuation support
• gift, inheritance, loan, distribution, or service-payment evidence
• prior Forms 3520, income-tax returns, FBARs, and Forms 8938

Then compare the file with our related analysis and identify the next deadline, decision-maker, and missing record. The immediate objective is a verified action plan, not a prediction of outcome.