Efile with form 3520

The Form 3520 is not part of the software. You can upload documents and attach things to the return but this does not yet relate to this form officially. When you mail your return, be sure to use tracking for the safe arrival of your forms.

Reference: Forms Not Included

Thanks so much for your response. I understand that form 3520 is not part of the efile and it has to be paper mailed.

The question is why does Turbotax take away the efile option, given that the form 3520 is sent via paper and is NOT to be sent/filed along with the return as per the IRS filing requirements?

The solution should have been to let people still eFile and the Form 3520 would need to be anyway sent separately via paper mail.

This seems to be a limitation in Turbo tax's implementation.

Yes, I agree. Turbo Tax does allow some returns to file electronically while allowing certain forms to be mailed in in a separate transmittal form.  Perhaps at some point, a 3520 will be a form that can be submitted in a separate transmittal form but for now, this option is not available. 

Hello,

I'm in the same situation as the original poster. On form 8938 I have to mark off that I need to submit one (1) form 3520. I know this 3520 form needs to be submitted by mail. But the problem is that marking off that a form 3520 needs submitted now takes away the possibility to file the rest of the tax forms with efile.

This is something that must have changed in the latest 2023 TT version, as last year I was able to send my 3520 form by mail, while still being allowed by TT to efile the regular tax return.

So the question would be if the federal tax law has changed and no longer allows part of the tax return to be efiled and part to be mailed, or if this an error in the 2023 TT version, in which case I hope this can be resolved soon.

I'm having the same issue - last year's, submission was fine - last year, I was able to send my 3520 form by mail while still being allowed by TT to file the regular tax return.

Its almost like Turbotax ended up with a bug in their software or rolled back a feature they had added.

They should fix it to make it more seamless for their customers.

Considering Turbotax is not willing to solve this bug, has anyone in the same situation (8938 form marked with 1 form 3520 to be filed) tried efiling with a different software? Debating on cutting my loses (money spent on Turbotax) and buying TaxAct, or other software, as well so I can efile. And then just start using that software from now on for the next years instead of Turbotax.

I am not aware of any other software which allows e-file in this scenario, Any one else does?

Hi has this been resolved or have you figured out what to do? Or end up filing by print out and mail it?

Is there a way to submit a request to fix the bug on not allowing efile when the box for Form 3520 was checked on Schedule B? I hope TurboTax will fix the bug, so that I can still efile my Form 1040 and mail in the Form 3520 separately.

Don't know for sure. I reported it via Support, but nothing has happened so far.

I tried one of the competitor one's too and that has the same issue and did not allow e-filing. Guess, paper filing is the only option.

I gave up on waiting on TT to fix this and went ahead and redid my taxes with TaxAct and I was able to file Federal and State online, and only send my 3520 by regular mail.

I called the TurboTax Expert line, and he did a screenshare. He said that unfortunately, TurboTax will not allow efile when there is a Form 3520. We either need to use another software provider or mail it in.

Has anyone tried reporting the same amounts disclosed on Form 3520 on form 8938 in TurboTax (it says you don't need to, but it doesn't say you can't) and then not entering this in the Number of Copies to be Filed field so that you can then e-file? It would work, but would it cause other issues with the IRS?

I think as long you remove the number of Form 3520 from Part IV of Form 8938, TurboTax will allow you to e-file. However, there is a check mark on Form 3520 to indicate whether you filed Form 8938. In other words, these two forms talk to each other, so I personally will not risk an inconsistent filing which could increase my audit risk. I will paper file my federal return to make sure it is correct and consistent. However, I will remove the number to trig the system to allow me to e-file my state return as Form 8938 is not reqired to be attached to my state.

Hi Dave - what if I leave the Number of Copied to be Filed to empty (or 0) for Form 3520 on Turbotax when I answer Foreign Financial Asset Already Reported question. Then I mail in my 1040 along with 3520 to IRS. Is there any inconsistency concerns? This is my first time file 3520. Print out over 100 pages of return form just because of 3520 is so inconvenient. Thanks 

This is true. The wording on Form 3520 c) is "Check if any excepted specified foreign financial assets are reported on this form." with meaning that you haven't reported them on 8938. If you don't check c) but report them on both 3520 and 8938 too then I wonder if this is good enough? The duplicative reporting change was brought in to make life easier, but because TT can't get its act together is actually makes it harder!

Hi,

I also need to file 3520 and I saw this topic. Seems like if you need to file both 8839 and 3520 then it will not be allowed to be efiled by TT? I am wondering if 3520 is the only form that I need to attach(actually mail), would it be applicable then(say no need to file 8839 as the value is always less than 10k in my oversea account), or will this still be risky as some said above these 2 forms are talking to each other.

If you aren't required to file the Form 8938 then you will be able to e-file without issue.   

The e-filing error only occurs when you are filling out form 8938 and you wish to indicate that you have reported an asset on 3520 rather than on 8938.  (Form 3520 is sent in separately from your tax return, to the Odgen, UT office.)

If your assets (in aggregate not per account) don't exceed the filing threshold for Form 8938, then you won't have this problem.  For Form 8938 whether or not you're required to file depends on where you live and your filing status:

Living within the United States

• Unmarried taxpayers (or married taxpayers filing separately) $50,000 on the last day of the year or $75,000 any day of the year
• Married taxpayers filing jointly $100,000 on the last day of the year or $150,000 any day of the year

Living outside of the United States (either with bona fide residence abroad or present in another country 330 days in a consecutive 12 month period)

• Unmarried taxpayers (or married taxpayers filing separately) $200,000 on the last day of the year or $30,000 on any day of the year
• Married taxpayers filing jointly $400,000 on the last day of the year or $600,000 on any day of the year

There shouldn't be any issues if, instead of indicating the number of assets which are ‌on the 3520, you duplicate the efforts by reporting the same account on both forms.  The ticker is meant to say "hey, this asset isn't on this form, it's on that one".  Reporting it on both should cause no problem aside from the obvious inconvenience of having to do so. 

TurboTax doesn't assist in preparing Form 3520 since it's not filed with your income tax return.  

@spsefton @sean99 @yihaow1229 @ronnierrl 

I guess I can do a duplicative reporting by putting the same information on both the Form 8938 and Form 3520. However, I will need to uncheck the box on Form 3520 C - "Check if any excepted specified foreign financial assests are reported on this form" because there is no "excepted specified financial assets" in my case. That way, there is no inconsistency, but only duplicative efforts.

Follow up - Form 3520 has mixed purposes:

1) to report transactions with foreign trust

2) to report receiving foreign gift in excess of $100K

I have to report 8938 as I worked abroad before and opened a salary account. This year I also have to report 3520 because I received a gift from foreign relative exceeding $100K. 

My understanding is that in TT's interview question "Foreign Financial Assets Already Reported" when generating for 8938, I should put 0 for form 3520, and thus I can still e-file. I also should uncheck the 3520 Item C, since I'm only reporting a received gift on 3520, and not a "excepted specified foreign financial assets". 

Is my understanding correct?

@SusanY1 

I am in the same boat with you. That is my plan as well.  

> " I also should uncheck the 3520 Item C, since I'm only reporting a received gift on 3520, and not a "excepted specified foreign financial assets". 

in instruction https://www.irs.gov/instructions/i3520

Check the box in item C only if the Form 3520 filer also files Form 8938 for the same tax year and includes this form in the total number of Forms 3520 reported on line 15 of Part IV, Excepted Specified Foreign Financial Assets, of Form 8938.

so I think it means I don't have to includes this form in the total number of Forms 3520 reported on line 15, since I don't  Excepted Specified Foreign Financial Assets, of Form 8938.

Got this answer from Custom GPT, Tax AI CPA mode.

The purpose of Line 15 in Part IV, "Excepted Specified Foreign Financial Assets," of Form 8938, is to report the number of certain informational forms filed by the taxpayer that relate to specific foreign financial assets. These assets are excepted from detailed reporting on Form 8938 because they are reported elsewhere, but the IRS still requires acknowledgment of their reporting on other forms to ensure comprehensive compliance with foreign asset reporting requirements.

The forms that might be relevant here include:

• Form 3520, for transactions with foreign trusts and receipt of certain foreign gifts.
• Form 3520-A, relating to foreign trusts with a U.S. owner.
• Form 5471, for certain foreign corporations.
• Form 8621, for information about passive foreign investment companies (PFICs).
• Form 8865, for certain foreign partnerships.
• Form 8891, for U.S. individuals with certain foreign retirement plans, which is no longer required but was relevant in prior years.

By reporting the number of these forms on Line 15 of Part IV of Form 8938, the taxpayer is indicating to the IRS that although these specified foreign financial assets are not being detailed on Form 8938, they have been reported as required on other relevant forms. This helps the IRS track compliance with foreign asset reporting obligations across different forms and ensures that the taxpayer has adequately disclosed their foreign assets in accordance with U.S. tax laws.

The key takeaway is that Line 15 helps maintain transparency with the IRS about the reporting of foreign assets and avoids unnecessary duplication of information while still ensuring that all necessary disclosures are made.

Instead of paper snail mail, for tax year 2023 I plan on sending my completed Form 3520 to the IRS electronically, using the IRS Online Account I setup a couple of years ago.  Saved lots of time circa ~2021 since the IRS was backlogged with over 6 months of unopened mail, due to COVID.