Form 3520: foreign gifts, inheritances and trusts
Money from family abroad doesn't usually mean U.S. tax, but large gifts and inheritances have to be reported on Form 3520. The same form covers foreign trusts, which can include some foreign pensions and savings plans. The penalties for missing it are steep, so it's worth knowing when it applies.
1Gifts and inheritances
You file Form 3520 if, in one tax year, you receive:
- More than $100,000 in total from a foreign person or a foreign estate, counting gifts from people related to each other together.
- More than $20,573 for 2026 ($20,116 for 2025) from foreign companies or partnerships.
There's no U.S. income tax on the gift or inheritance itself: the form just tells the IRS about it. Inherited property usually takes its value at the date of death as your cost, which matters when you sell. A gift from a U.S. person doesn't go on Form 3520, even if they live abroad.
2Foreign trusts
Form 3520 is also needed if you create a foreign trust or put money into one, receive a distribution from one, or are treated as its owner. A foreign trust you're treated as owning also needs its own Form 3520-A each year, due March 15.
Some arrangements that don't look like trusts can count as trusts for the IRS, including some foreign pensions, savings plans and private foundations.
3Pensions and savings plans
An IRS exemption from 2020 (Revenue Procedure 2020-17) takes many tax-favored foreign retirement and savings plans out of Forms 3520 and 3520-A, if they meet its conditions, such as limits on contributions and tax relief in the country where they're set up. They still go on your FBAR and, when you're over the thresholds, Form 8938.
4Penalties, and fixing a missed form
The penalties are among the IRS's steepest:
- Unreported gifts: 5% of the gift for each month the form is late, up to 25%.
- Foreign trust transactions: the greater of $10,000 or 35% of the amount involved.
- A missing Form 3520-A: the greater of $10,000 or 5% of the trust's assets.
If you also have unfiled returns, the Streamlined procedures cover Form 3520 too, without these penalties if you qualify. If everything else was filed, a late Form 3520 goes in with a reasonable cause statement, which the IRS considers before deciding on a penalty. All the routes: IRS tax amnesty options for expats.
Common questions
My parents abroad send me money every year. Do I report it?
Only if the gifts from them add up to more than $100,000 in a year. Below that, there's nothing to file.
I inherited money from a relative abroad. Do I owe U.S. tax?
Generally not on the inheritance itself. You report it on Form 3520 if it's over $100,000, and any income it earns after you receive it is taxable.
What does Form 3520 cost with you?
$400 per year for Forms 3520 and 3520-A, on top of the package. See our pricing.
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Reviewed by Lewis Grunfeld, CPA. General information, not advice for your specific situation.