Form 3520 is the IRS information return for transactions with foreign trusts and for large gifts or inheritances from abroad. As of October 2026, a US person must file it if they received more than $100,000 in a year from a nonresident alien or a foreign estate, and the gift itself usually isn't taxed: it's the reporting that's compulsory.
It matters most to people with family overseas. Picture a parent abroad sending funds for a house deposit: nobody owes tax on the gift, but if the gifts top $100,000 in the year and Form 3520 isn't filed, the late-reporting penalty can still apply. Everything below comes from the IRS's 12/2025 instructions.
Who files Form 3520
| Situation | Part of the form |
|---|---|
| You created a foreign trust or transferred property to one | Part I |
| You're treated as the owner of part of a foreign trust | Part II |
| You received a distribution, a loan or free use of property from a foreign trust | Part III |
| You received more than $100,000 of gifts or bequests from a nonresident alien or foreign estate | Part IV |
| You received gifts from a foreign corporation or partnership above the section 6039F threshold | Part IV |
For foreign corporations and partnerships, the threshold changes each year with inflation, and the IRS points you to its inflation adjustment page for the current figure.
How the $100,000 test works
You add up gifts from different nonresident aliens and foreign estates if you know, or have reason to know, that they're related to each other, or one is acting for the other. The IRS's own example: you get $75,000 from Abby and $40,000 from Brian, both nonresident aliens, and you know they're related. Together that's over $100,000, so you answer Yes on line 54 and list both gifts.
If the two weren't related, neither gift alone would cross the line and you wouldn't report them in Part IV. The test is about what you know, so if gifts come from parents, grandparents or siblings, assume they count together.
Due dates
- Generally the 15th day of the 4th month after your tax year ends, so April 15 for most individuals.
- June 15 if you're a US citizen or resident living and working abroad and you meet the conditions in the instructions.
- October 15 if you've been granted an extension for your income tax return.
- For a US decedent, April 15 after the decedent's last tax year, or October 15 if that return was extended.
Form 3520 doesn't go in with your income tax return. It's sent on its own to the IRS service center in Ogden, Utah, listed in the instructions. Only a complete Form 3520, with every required attachment, counts as filed on time, so don't send a half-finished one to beat the date.
Penalties
This is why the form matters. As of October 2026 the instructions set out:
- Late, incomplete or incorrect Form 3520: generally the greater of $10,000 or 35% of property transferred to a foreign trust (Part I) or 35% of distributions received from one (Part III).
- Foreign grantor trust that doesn't file Form 3520-A: 5% of the trust assets treated as owned by the US person, unless the owner attaches a substitute Form 3520-A on time.
- Unreported foreign gifts: 5% of the gift for each month the failure continues, up to a total of 25%.
- Further penalties if you still haven't complied 90 days after the IRS mails a notice.
No penalty applies if you can show reasonable cause and not willful neglect. But the IRS says that a foreign country's penalties for disclosure, or a foreign trustee's reluctance, aren't reasonable cause.
The assessment period trap
If a complete Form 3520 isn't filed by the due date, including extensions, the time limit for the IRS to assess tax connected to the unreported event can stay open. In other words, a missing Form 3520 can keep an old year exposed long after you'd expect it to be closed.
Distributions from a foreign grantor trust
If you're a US beneficiary and the trust sends you a complete Foreign Grantor Trust Beneficiary Statement (page 5 of Form 3520-A), you attach it and don't complete the rest of Part III for that distribution. You then treat the payment for income tax purposes as if it came straight from the trust's owner. If the owner meant it as a gift, it isn't added to your gross income.
What you don't need to report
Some foreign arrangements are carved out of Form 3520 entirely. The instructions list, among others:
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- Canadian RRSPs, RRIFs and other Canadian retirement plans covered by Rev. Proc. 2014-55
- Certain tax-favored foreign retirement and savings trusts for eligible individuals, under Rev. Proc. 2020-17
- Most fair market value transfers by a US person to a foreign trust, though some still need reporting
- Transfers to foreign trusts the IRS has recognised as exempt under section 501(c)(3)
If you and your spouse file a joint income tax return and you're both transferors, grantors or beneficiaries of the same foreign trust, you can file one joint Form 3520 and tick the box on line 1i.
Living overseas? Our guide to the exclusion for Americans working abroad explains the tests and where people trip up.
Related forms to check
If you hold accounts abroad as well, you may also need the FBAR. If you own a US company with a foreign owner, look at Form 5472. Form 3520 doesn't replace either.
My take
If family abroad helps you out with a large sum, file Form 3520 the following spring. It's an information form, the gift usually isn't taxed, and the 5% per month penalty is completely avoidable. Keep the transfer records and a note of who sent what, because related givers are counted together.
Holding shares in a foreign fund adds another filing, and our guide to reporting foreign funds explains the PFIC rules simply.
Frequently asked questions
Do I pay tax on a gift from a parent abroad?
Usually not, but if gifts from nonresident aliens or foreign estates total more than $100,000 in a year you must report them on Form 3520, as of October 2026.
When is Form 3520 due?
Generally April 15 for individuals, June 15 if you live and work abroad and qualify, or October 15 with an income tax extension.
What's the penalty for not reporting a foreign gift?
5% of the gift for each month the failure continues, up to 25%, unless you show reasonable cause.
Do gifts from two relatives count together?
Yes, if you know or have reason to know the givers are related, you add their gifts together for the $100,000 test.
