Form 3520

[Sorelya]

I received a gift from a foreign country in Feb. 2023. 

It's my understanding that I don't have to file Form 3520 until April '24. 

Is that correct or do I file it this year, 2023?

Thank you in advance!

[MaryK4 · Accepted solution]

That is correct- it is due on the same day as your tax return will be so since you received the gift in 2023, you do not have to file until next year.  Remember that it is filed separately and must be mailed to the IRS.

Send Form 3520 to the following address.

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409

[Sorelya]

Thank you for your quick reply, wonderful

[pk]

@Sorelya , while agreeing with the excellent reply from @MaryK4 , just wanted to make sure you were aware of the following

(a) you said " gift from a foreign country " ----- hope you are talking about a foreign person / trust / estate i.e.  what determines the need for the filing of 3520 is the status of the donor --- Non-Resident Alien, a foreign trust or Estate , established  under the laws of a foreign country

(b) you have to be a US person when the gift was received  i.e. US citizen or Green Card or Resident for Tax purposes

(c) the value of the gift has to be  equal or more than US$100,000

(d) generally we are talking about cash / liquid/semi-liquid gift here

(e) because the donor is foreign ( a non-resident alien person / entity ) there is no requirement  for the donor to do anything for US purposes.

(f) the donor cannot / must not be a sanctioned person/entity or you will run afoul of the treasury sanction rules ( doing business with the "enemy" / money laundering)

(g) there is no tax implications for the donee ( recipient) but not reporting the gift  attracts  rather onerous penalty.

(h) also note that both FBAR  and / or FATCA ( form 8938 ) may also come into play depending on the nature and the transfer " history" of the gift

Hope this helps

[Sorelya]

Thank you for the detailed answer. 

a) the donor is a non resident alien

b) I am a us person

c and d) the gift is an apartment, slightly over the reporting price

f) donor is not sanctioned

h) I was not aware of form 8938, will research it now

Thank you! Much appreciated

[pk]

@Sorelya , an apartment, that means there is no need for FBAR ( FinCen form 114 ) or FATCA ( form 8938 ).  Form 3520 is still required  -- but you do understand that the basis of the  gift ( for purposes of computing capital gain under US tax laws ) would be basis of the donor -- it is usually better ( tax wise ) to receive  as part of inheritance because then the basis is  Fair Market Value of the asset ( hence reduced Capital gain -- US does not index basis as in countries like India  ).

Hope this helps

pk

[Henry1968]

Hi, 

If received gifts  of  $100000, but from two different people. Do I need to file form 3520?

Thanks in advance.

Jacob1968

[KrisD15]

Yes, you should - to be on the safe side. 

Although it was two different people, the IRS may feel the two people are related. 

According to the IRS:

“More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; “

Form 3520

[pk]

@Sorelya , the instructions  for form 3520 says:

"  

Line 54.

To calculate the threshold amount ($100,000), you must aggregate gifts from different foreign nonresident aliens and foreign estates if you know (or have reason to know) that those persons are related to each other (see Related Person , earlier) or one is acting as a nominee or intermediary for the other. For example, if you receive a gift of $75,000 from nonresident alien individual A and a gift of $40,000 from nonresident alien individual B, and you know that A and B are related, you must answer “Yes” and complete columns (a) through (c) for each gift.

So I think it would be mandatory ( based on exact facts and circumstances ) to file 3520  for the scenario that you were describing above. This  has no tax implications for the recipient under US laws.   I know that in tax jurisdictions  where wealth tax is valid , parents / relatives often  transfer ownership(s) to children / others to avoid  wealth tax implications.

@KrisD15 

[MUSTANGSally89]

Hello! Trying to understand if by paying for one of the premium turbotax services ("max" for instance) I can get help filling form 3250 for foreign gifts?

[DoninGA]

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@MUSTANGSally89 wrote:

Hello! Trying to understand if by paying for one of the premium turbotax services ("max" for instance) I can get help filling form 3250 for foreign gifts?

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TurboTax does not support IRS Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts

Go to this IRS website for the Form 3520 and Instructions - https://www.irs.gov/forms-pubs/about-form-3520

[pk]

@MUSTANGSally89 , between my answer above and my colleague @DoninGA , and @KrisD15 , are you now set with filing a form 3520 ?   or do you need more help ?   If you need more  help, please some  context (  from a person / estate/ trust etc. ,  what country , is the person/entity a foreign  person under US laws,  should I assume that the gift is  cash/liquid asset or what  etc. etc. ) .

[Austinite00]

I haven't seen a suitable answer to my question after reading all the questions.  I received inheritance deposited to my account from my Brother who is deceased.  They were over several days (multiple banks) and smaller amounts from each that total slightly over 100K.  15 days to be exact.  In the date field, can I write 3/10-7/23 for example?  Or do I need to list each along with the dates individually?

Thank you.

[pk]

@Austinite00 ,  my two cents would be :

(a) use the last date when all the monies / wires  were  in your account.  I say this because this was all done within 15 days  ( so the monies were "in transit", multiple accounts owned by the same  decedent etc. etc.).

(b)  Turbo Tax cannot  handle  date spans but can handle multiple entries

( c)   This was related to the same decedent, same country etc. etc.

If the amounts were from different  persons, different countries or over a long period like a month or two , then YES, you should enter  these  receipts  individually.

Does this help ?   Is there  more I can do for you ?

pk

[Austinite00]

So I was able to get an IRS agent on the phone, and although hesitant, he said he would go ahead and help me this time.  He said to attach a separate spreadsheet and list each transaction as separate if they were on different days, even though it was the same person.  In my case, 4 transactions were within 4 days of each other, and then some were a month later etc..  he said to group it by day, and any transactions on the same date can be added together.. but those on the next day need a new line.  Guess they have spoken.. so it is I think 10 unique lines for me.  Thanks for responding.. and hopefully they will be more clear about this in the future.. I did let the agent know what the issue was, and he agreed.  Also, he said to send all the pages even though I am only writing on page 1 and 6.  He said this is because there is a person keying it in, and he/she expects each form there, and flips each form as he/she enters it in.. so I guess that makes sense.  It can be single sided or double sided.. doesn't matter  (had to ask that as well to be very clear).