IRS page on gifts from foreign persons

This IRS page describes reporting rules for gifts and bequests from foreign persons. For a U.S. citizen, it explains when Form 3520 applies and how the page distinguishes gifts from foreign trust distributions.

Scope of the foreign gifts rules

The Internal Revenue Service publishes an information page titled "Gifts from foreign person." A U.S. person who receives gifts or bequests from a foreign person may have to report them on Form 3520 when the amounts exceed the reporting thresholds. Related IRS materials and other international reporting forms may also apply.^[1]

A foreign gift or bequest is an amount received from someone other than a U.S. person, treated by the recipient as a gift or bequest and excluded from gross income. Payments made on a U.S. person's behalf for qualified tuition or medical expenses are excluded from this definition.^[1]

The IRS definition of a foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, or foreign estate. It also includes a domestic trust treated as owned by a foreign person. These definitions determine which gifts fall within the foreign gift reporting rules.^[1]

Form 3520 reporting rules

For a U.S. person who receives a reportable foreign gift or bequest, Part IV of Form 3520 is the reporting section. The form's full title refers to transactions with foreign trusts and receipt of certain foreign gifts. Form 3520 is filed separately from the income tax return under the form instructions.^[1]

Reporting is required only when the applicable threshold is exceeded. Gifts from related parties are aggregated to determine whether a threshold has been met. For gifts or bequests from a nonresident alien or foreign estate, the stated threshold is more than $100,000 in total during the taxable year, counting related persons the recipient knows or has reason to know are related. If that amount is exceeded, each gift over $5,000 is separately identified.^[1]

For purported gifts from foreign corporations or partnerships, an aggregate threshold applies, adjusted annually for inflation. Once that threshold is met, each gift and the donor's identity are separately identified.

Form 3520 is generally due on the 15th day of the 4th month after the end of the U.S. person's tax year, with a different due date for citizens or residents living outside the United States and Puerto Rico and for certain military or naval service abroad. An extension of time to file the income tax return also extends the Form 3520 due date, up to a maximum of 6 months. The form instructions provide further details.^[1]

Foreign trusts and other reporting

Distributions from a foreign trust are reported on Part III of Form 3520, while foreign gifts and bequests are reported on Part IV.

Other international reporting forms may also be required, including FinCEN Form 114, known as the Report of Foreign Bank and Financial Accounts, and Form 8938, Statement of Specified Foreign Financial Assets. Form 3520 and its instructions hold the full reporting rules.^[1]

Finding the official text

The official text is published by the Internal Revenue Service on its website under the title "Gifts from foreign person." The IRS directs readers to the Instructions to Part IV of Form 3520 and the full Form 3520 instructions for further information.

For filing, the IRS gives a mailing address for Form 3520 at the Internal Revenue Service Center in Ogden, Utah. The IRS also points to guidance on gifts and bequests from covered expatriates.^[1]

Questions and answers

Which part of Form 3520 covers a foreign gift?

Part IV applies to reportable gifts or bequests from a foreign person. Foreign trust distributions are reported on Part III.^[1]

How is a foreign gift defined?

A foreign gift is an amount received from someone other than a U.S. person that the recipient treats as a gift and excludes from gross income. Qualified tuition or medical payments made on the U.S. person's behalf are excluded from this definition.^[1]

When does the stated threshold apply to gifts from a foreign estate?

The threshold is more than $100,000 in aggregate gifts or bequests during the taxable year from a nonresident alien or foreign estate, including related persons known or reasonably known to be related. If the threshold is exceeded, each gift over $5,000 is separately identified.^[1]

Does Form 3520 replace other foreign reporting forms?

No. FinCEN Form 114 and Form 8938 may also be required, so filing Form 3520 does not replace them.^[1]

Where can a reader find the official Form 3520 material?

The IRS lists Form 3520 and its instructions among its references, and points to the instructions for Part IV. It also provides a mailing address for the form.^[1]

Related glossary terms

Section 6048: Section 6048 sets information reporting rules for certain foreign trusts. Its parts cover notice of events, U.S. owner duties and beneficiary distributions.
Foreign grantor trust beneficiary statement: A foreign grantor trust beneficiary statement appears on page 5 of Form 3520-A. It reports distributions to U.S. beneficiaries and identifies the trust's owner.