IRS Foreign Trust Reporting Requirements
This IRS page describes U.S. tax and information reporting rules connected to foreign trusts. For a U.S. citizen, it identifies circumstances involving trust transfers, ownership, distributions, and foreign financial accounts that can bring specific forms into scope.
Scope of the IRS overview
Forms 3520 and 3520-A, required under Internal Revenue Code section 6048, are the main U.S. information returns connected to foreign trusts, alongside basic income tax rules.[1]
A U.S. person includes a U.S. citizen or resident, along with certain domestic entities, estates, and trusts meeting specified control and supervision tests. The reporting rules therefore apply to a wider group than citizens alone.[1]
The IRS describes possible tax treatment for U.S. persons treated as owners or beneficiaries, and for the foreign trust itself. It also discusses information reporting where a U.S. person transfers assets, receives a distribution, or has another transaction with a foreign trust.[1]
The Forms 3520 and 3520-A instructions set out filing eligibility, exceptions, and filing procedures.[1]
Forms and trust-related rules
Form 3520 is an annual return for certain transactions with foreign trusts and receipts of certain foreign gifts. The IRS lists transfers or loans to a foreign trust, distributions or loans received, and treatment as the trust's U.S. owner among the circumstances that can require the form.[1]
A U.S. person treated as an owner under grantor trust rules is generally taxed on the trust's income. Under the rule for transfers to a trust with or presumed to have a U.S. beneficiary, the transferor may be treated as an owner.[1]
A U.S. beneficiary receiving a distribution from a foreign non-grantor trust generally reports the beneficiary's share of distributable net income. Beneficiary statements describe the taxability of distributions, and the Form 3520 instructions cover reporting when no statement arrives.[1]
Form 3520-A is the annual information return for a foreign trust with a U.S. owner. The IRS states that the trust files it and provides annual statements to U.S. owners and beneficiaries; if the trust does not file, the U.S. owner completes a substitute and attaches it to a timely Form 3520.[1]
Exceptions apply for certain Canadian registered retirement savings plans and income funds, and for some qualifying foreign trusts providing specified benefits. These exceptions do not remove other foreign asset or account reporting obligations that may apply.[1]
Other U.S. reporting connections
A U.S. citizen connected to a foreign trust may have reporting duties beyond Forms 3520 and 3520-A. Form 1040 Schedule B, Part III, applies when a person receives a distribution, was the grantor, or transferred assets to a foreign trust.[1]
The IRS also identifies Form 8938 for specified foreign financial assets when their total value exceeds applicable reporting thresholds. Separately, a financial interest in or signature authority over a foreign financial account may bring an annual account report into scope.[1]
The annual report for foreign accounts is FinCEN Form 114, Report of Foreign Bank and Financial Accounts.
Questions and answers
Who counts as a U.S. person for these rules?
The definition includes a U.S. citizen or resident. It also includes specified domestic entities and certain estates and trusts that meet the stated tests.[1]
When can Form 3520 apply to a U.S. citizen?
The IRS lists transfers or loans to a foreign trust, receiving distributions or loans, and being treated as the trust's U.S. owner. Certain gifts or bequests from foreign persons are also listed.[1]
What does Form 3520-A report?
It is the annual information return for a foreign trust with a U.S. owner. The trust provides annual statements to its U.S. owners and beneficiaries.[1]
Can foreign account reporting apply alongside trust forms?
Yes. The IRS identifies Form 8938 for specified foreign financial assets above applicable thresholds. It also describes annual reporting for certain foreign accounts where a person has a financial interest or signature authority.[1]
Related resources
Related glossary terms
- Foreign trust classification: A trust is foreign under Form 3520 when it fails either domestic trust test. The tests ask about U.S. court supervision and control of substantial decisions.
- Specified foreign financial asset: The Form 8938 instructions use specified foreign financial asset for certain foreign accounts and investment holdings. The term identifies assets for reporting.
- Section 679: Section 679 addresses certain transfers by U.S. persons to foreign trusts. It treats some property transfers as ownership when the trust has a U.S. beneficiary.
Related articles and guides
- Cyprus reporting rules and U.S. trust forms: A reference to Cyprus automatic financial account information exchange, FATCA agreement status, trust register rules, and IRS reporting forms for U.S. citizens.
- Malta trust taxation and U.S. reporting: Malta summarizes trust tax treatment and administrative obligations for a trust with at least one Malta-resident trustee, and IRS forms for U.S. persons.
- Mauritius Trust Tax and Reporting Rules: Mauritius legislation on trusts and trustee residence, with the IRS guidance on foreign trust reporting by U.S. persons who own or benefit from such trusts.
Related pages
Sources and data notes
- U.S. Government, Foreign trust reporting requirements and tax consequences. https://www.irs.gov/businesses/international-businesses/foreign-trust-reporting-requirements-and-tax-consequences. Retrieved .
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